Fiscal Policy Shocks and Industrial Sector Output Growth in Nigeria: A Structural Vector Error Correction (SVEC) Approach

This study estimated Nigeria's fiscal policy shock and industrial productivity growth between 1980 and 2022. The study employed varied methodologies including Augmented Dickey-Fuller (ADF), Phillip Peron (PP), and Structural Vector Error Correction (SVEC) to ascertain the interactions amongst the macroeconomic indicators. The result shows that government spending exhibits a significant negative relationship with the industrial sector in Nigeria, though there was evidence of fiscal sustainability. The Nigerian industrial sector output responds positively to government revenue shock. The IRF and the FEVD results corroborated the SVEC result that the government expenditure shock has negative effect on the Nigerian industrial sector output growth.