AGGREGATE DEMAND AND FISCAL POLICY ADJUSTMENT IN NIGERIA: EVIDENCE FROM TWO STAGE LEAST SQUARED AND SIMULATION EXPERIENCE

Authors

  • Titus Wuyah Yunana Nigeria Police Academy, Wudil-Kano
  • Umar Yunusa Sa’id Federal College of Education, Zaria

DOI:

https://doi.org/10.57233/gujaf.v1i2.29

Keywords:

Aggregate Demand, Government Spending, Taxation, Public Debt, Simulation

Abstract

This study examined the shocks in aggregate demand to fiscal policy adjustment in Nigeria using time series annual data from 1986-2020.The study constructs simple structural macroeconomic models made up of two blocks: consumption and investment sectors that contain seven variables; four are behavioural equations and two are identities. The models were estimated and analyzed using Two Stage Least Square methods and a simulation experiment was also conducted on the simple structural macroeconomics models. The study finds that fiscal policy variables (Tax, government spending and public debt) have significant influence on aggregated demand in Nigeria during the period under investigation. Similarly, the simulation shows magnificent tracking power of the actual from the baseline simulation as the nature of the movement suggested. The study, therefore, recommends that the government should encourage expansionary fiscal policy by expanding public spending channeled to infrastructure and other sectors of the economy like commercial farming and creation of utility. These have to been done through proper monitory as funds usually diverted to private pockets, decrease in taxes as it expands the purchasing power of the citizens which influence aggregate demand and output.

Author Biographies

Titus Wuyah Yunana, Nigeria Police Academy, Wudil-Kano

Department of Economics and Management Science,
Nigeria Police Academy, Wudil-Kano

Umar Yunusa Sa’id, Federal College of Education, Zaria

Department of Economics,
Federal College of Education, Zaria

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Published

2020-10-20

How to Cite

Wuyah Yunana, T., & Yunusa Sa’id, U. (2020). AGGREGATE DEMAND AND FISCAL POLICY ADJUSTMENT IN NIGERIA: EVIDENCE FROM TWO STAGE LEAST SQUARED AND SIMULATION EXPERIENCE . Gusau Journal of Accounting and Finance, 1(2), 15. https://doi.org/10.57233/gujaf.v1i2.29