Fiscal Policy and Social Welfare: Zellner’s Multivariate Regression Approach

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Odior, E.S.O.
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Journal of Social and Management Sciences
This paper examines empirically how the different fiscal (tax-spending) policy instruments affect social welfare in Nigeria. The paper uses a multivariate econometric regression modelling technique to estimate the relationship between the real per capita GDP and fiscal policy variables categorized into capital and recurrent heads and disaggregated across productive and unproductive heads of Government expenditure in Nigeria. Variables like government expenditure which comprises both capital and recurrent expenditure, also government total revenue, and other basic macroeconomic rate variables are considered in this study. Empirical study has shown that, there exists a positive relationship between the roles of fiscal policy and the welfare given the fact that employment, price stability, infrastructural development etc. are as a result of government spending. It was also found out that the productive government expenditure has positive effect on economic growth i.e. productive government expenditure is growth-enhancing. Thus, the study concluded that the components of government expenditure and tax revenue matter in determining welfare and recommends that fiscal policy/government expenditure should be focused and directed towards productive uses like education, health and infrastructure, so as to enhance welfare growth, thereby making Nigeria a better nation to live in.
Fiscal Policy , Social Welfare , Government Expenditure
Odior, E. S (2015), “Fiscal Policy and Social Welfare: Zellner’s Multivariate Regression Approach, Journal of Social and Management Sciences, Faculty of The Social Sciences, Delta State University, Abraka, Vol. 10, No. 3, Pp, 150 – 159