The Effect of Fiscal Policy on Manufacturing Sector Output in Nigeria.

Abstract

The objective of the paper is to investigate the effect of fiscal policy on manufacturing sector output in Nigeria between 1986 and 2021. The type of data utilized was secondary and was extracted from the Central Bank of Nigeria’s 2021 statistical records. The Fully modified ordinary Least Square method of analysis was adapted in carrying out the analysis. Unit root tests were carried out on each of the variables used in the study to avoid spurious regression results, and the results confirmed variables are all stationary at first difference. The Co-integration ARDL bound test showed that long-run relationship exists between the variables, and the conditions necessary to apply the Fully Modified ordinary Least Square method (FMOLS) met. The study’s insights demonstrated that fiscal policy strategies significantly bolster the outputs of the manufacturing Sector output. The article advises that the budget and national planning should earmark increased resources for foundational advancements in their fiscal plans, such as electricity and transportation, as this will augment manufacturing industry results. Additionally, tax breaks and incentives should be granted to the manufacturing sector of Nigeria economy.