Abstract
Nigeria has enormous potentials for development if reliable economic policies are implemented and rigorously pursued. As such, this study examines the effects of fiscal operations on the economic growth and stability with the view to identifying its significance on real output growth and sustainable development. The study utilises an annual time series data covering the period of 1980–2015 and further adopts an autoregressive distributed lag (ARDL) model for estimation. The estimated model is sub-divided into two: the baseline model and the alternative model. While the former measures the effects of economic growth, the latter accounts for the effects of economic stability. The ARDL bound testing shows the existence of long-run relationship among the examined variables in both the models, with corresponding F-statistic values of 7.62 and 6.67, respectively, which are greater than the critical bound values of both lower and upper bounds. The
overall results indicate that fiscal operations lead to economic growth as shown by the baseline model; and it can also leads to economic stability as revealed by the alternative model. It can therefore be concluded that any meaningful spending with corresponding taxation will improve the public sector performance and produce a desirable outcome on output growth and strengthen the capability of fiscal policy in terms of economic stability. There is an urgent need to ensure that appropriate fiscal operations are conducted and do not result in excess liquidity beyond the absorptive capacity of the economy.
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