Interactive Effect Of Fiscal Instability And Non-Oil Tax Revenue On Economic Growth In Nigeria

ABSTRACT This study investigates the interactive effect of fiscal instability and non-oil tax revenue on economic growth in Nigeria using the Autoregressive Distributed Lag (ARDL) model. Annual time series data from 1986 to 2023 were utilized, with Real Gross Domestic Product (LRGDP) as the dependent variable, while fiscal deficit variance (FDV), non-oil tax revenue (LNNTR), debt service ratio (DSR), labor force (LABF), and investment growth (INVG) serve as the independent variables. The long-run results reveal that the interaction between fiscal instability and non-oil tax revenue (FDVLNNTR) positively and significantly influences economic growth, while fiscal instability alone has a negative impact. Non-oil tax revenue significantly promotes economic growth, while DSR, LABF, and INVG are found to be insignificant in the long run. Effective fiscal policy management is recommended to enhance the growth impact of non-oil tax revenue in Nigeria.