Usena MOMODU

The broad objective of this study is to examine the effect of fiscal policy and aggregate economic activities on economic growth in Nigeria. To achieve the purpose of this study four hypothesis were formulated to guide the study, literature review was carried out on the variables and hypothesis of the study. A dynamic equation is specified to describe the relationship between the dependent variable RGDP and the independent variable GDP = f(Tax, HDC, GINV, TRN, SAVS). the study examined fiscal policy, aggregate economic activities and economic growth in Nigeria utilizing annual time series data for the period of 1981 to 2021. This research employed the following methods for analysis: Descriptive Statistics, Unit Root test, Co-Integration test, granger causality test and vector autoregressive technique of estimation. Based on the results of empirical analysis, it can be ascertained that there is sufficient evidence to indicate that fiscal policy, aggregate economic activities have long run relationship with economic growth in Nigeria as the trace statistics and max Eigen value test indicate a case of co-integration among the variables. However, according to the VECM result fiscal policy is not significant in influencing economic in the short run while in the long run it significantly influences economic growth. Consumption both first and second period lags significantly influences economic growth in Nigeria while investment seems not influence economic growth in Nigeria. Thus, it can be concluded, that fiscal policy and consumption drives economic growth in Nigeria while investment does not