Effect of Fiscal Policy on Price Stability in Nigeria


  • Josephine Ene Department of Accounting and Finance, Baze University, Abuja
  • Kasim Bushi Department of Banking & Finance, Nasarawa State University Keffi


The study investigated the short-run and long-run dynamic effects of aggregates of fiscal policy on price stability in Nigeria using Autoregressive Distributed Lag (ARDL) Model and Error Correction Model (ECM) on time series data from 2000 to 2019. The results revealed that, in the short-run as well as the long-run of the period of study, budget deficit and government expenditure had insignificant effect while taxation exerted a positive and significant influence on price stability measured as the inflation rate. This strongly controverts the postulation of fiscal theory of price level (FTPL) and suggests that not all expansionary fiscal policies in developing economies are inflationary. The study, therefore, recommended that in enacting taxation laws, policymakers should identify and incorporate the economy-wide repercussions and implications of taxation.

Keywords: Price Stability, Fiscal Policy, Budget Deficit, Government Expenditure, Taxation



How to Cite

Ene , J. ., & Bushi, K. . (2022). Effect of Fiscal Policy on Price Stability in Nigeria. Baze University Journal of Entrepreneurship and Interdisciplinary Studies, 1(1). Retrieved from http://koha.bazeuniversity.edu.ng/index.php/bujeis/article/view/7