CHAPTER ONEINTRODUCTION1.1 BACKGROUND OF STUDY

Fiscal policy deals with government deliberate actions in spending money and levying taxes with a view of influencing macroeconomic variables in a desired direction. This involves sustainable economic growth, high employment creation and low inflation. Thus fiscal policy aims at stabilizing the economy increase in government spending or a reduction in taxes tends to pull the economy out of a recession. In other words, this study will be important firstly, to the monetary authorities that are (Central Bank of Nigeria CBN) as the forgone mini definition of fiscal policy is set limited in the amount of government debt that can be held by the public. The board of internal revenue (BIR) and revenue mobilization and fiscal commission (RMATC) cannot be left out or overlook as this study will seek to solve the problems associated will taxes and tax collection.One of the many problems with fiscal policy is that intends to affect particular group disproportionally. A tax decrease might not be applied to tax payer at all income level or some group might see larger decreases than other likewise an increase in government spending will have the biggest influence on the group that is receiving that spending which in the cost of highway spending world be construction workers fiscal policy and monetary policy are two major driver of a nation’s economic performance through monetary policy a country’s central bank influence the money supply regulators use both policies to try to boost a flagging economy maintain a strong economy or cool off an overheated economy.

1.2 STATEMENT OF THE PROBLEM

Upon several government policies on the stability of Nigerian economy, there have been a lot of challenges facing the growth of Nigerian economy. These challenges include: corruption and ineffective economic policies (Gbosi. 2007); inappropriate and ineffective policies (Anyanwu, 2007); lack of integration of macroeconomic plans and the absence of harmonization and coordination of fiscal policy (Onoh, 2007); gross mismanagement/misappropriations of public funds (Okemini and Uranta, 2008); and lack of economic potential for rapid economic growth and development (Ogbole, 2010). Despite the emphasis placed on fiscal policy in the management of the economy, Nigerian economy is yet to come on the path of sound growth and development because of low output in the difference sectors to the economy, hence this write up.

1.3 OBJECTIVE OF THE STUDY

The main objective of the study is to examine the effect of fiscal policy on the economic growth. In specific terms the study seeks to;i. Examine the relationship between government expenditure and economic growth.ii. To examine the effect of government borrowing on the economic growth.iii. To access how taxation influence economic growth.iv. To examine how spending influence economic growth.

1.4 RESEARCH QUESTION

For this research work to be carried out, the following research question will be formulated, which are;i. How government revenue does influences economic growth?ii. How does taxation affect economic growth?iii. How does government expenditure growth influence economic growth?iv. How does government borrowing contribute to economic growth?

1.5 RESEARCH HYPOTHESIS

For the purpose of this research, the following hypothesis should be tested:H1: There is no significant relationship between government expenditure and gross domestic product.H2: There is no significant relationship between government borrowing and economic growth.H3: There is no significant relationship between government budget and economic growth.H4: There is no significant relationship between government spending and economic growth.

1.6 SIGNIFICANCE OF THE STUDY

The importance of this study cannot be overemphasized, because of the awareness it will create in the public sector about the topic of discussionThis study will be beneficial to different ministries and parastatals especially those that have to do with education, agriculture, finance, commerce, industries and health.It will equally be helpful to the government as well as the general public.

1.7 SCOPE OF THE STUDY

This study focuses on the effect of fiscal policy on the growth of Nigeria Economy. It covers from 2000-2016 as the scope. Data within the range will be relevant for the analysis of the study.

1.8 LIMITATION OF THE STUDY

The researcher met with a lot of constraints, some of these problems include that of time and financial barriers. The time constraint has to do with the limited period available to the researcher within which to complete the project. Due to financial constraints faces by the researcher, data analysis for survey was narrowed down in the selected organization.

1.9 DEFINITION OF TERMS

Fiscal Policy: It is the means by which a government adjusts its spending levels and tax rate to monitor and influence a nation’s economy.Government Spending: It is all government consumption, investment, and transfer payments. It is a financed by government borrowing.Growth: It is adaptation on the changing skill requirement of its labour force with change in technological.Liquidity: This is the degree of ease and uncertainty with an assessment which can be return into a given amount of economy medium of exchange.Recession: It is a turn in the level of the economy and business activities.National Budget: It is the financial statement of the government proposed expenditure and the expected revenue during a particular period of time usually a year.Government Borrowing: it is money that the government borrows to spend on public services.Taxation: It refers to compulsory or coercive money collection by a levying authority.Budget: a budget is a estimation of revenue and expenses over a specified period of time.