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The aim of this paper is to examine the relative effect of tax policy reforms on economic growth with a view to analyzing whether tax burden and tax mix have direct or indirect association with economic growth in Nigeria using annual data from 1970-2012. Error Correction Mechanism (ECM) and cointegration technique of analysis are utilized to analyze the data and draw policy inferences. The empirical results show that both tax burden (t = 17.78, p < 0.05) and tax mix (t = 7.48, p < 0.05) are found to be statistically significant but negatively associated with economic growth in Nigeria. The study found that higher taxes are strongly correlated with reduced economic growth and that the policy reforms that reduced tax burden and tax mix by shifting from direct tax to indirect and equally improving on tax administration and tax collections would enhance economic growth in Nigeria. [ABSTRACT FROM AUTHOR]

This paper analyzes the fiscal response of the government to aid inflows in Nigeria during the period 1961 to 2009. This is against the backdrop of the fact that no study has analyzed the peculiar fiscal response/behavior of the government in Nigeria vis-à-vis aid flow over time. Yet, the fiscal response of the government had significantly determined and shaped the growth path of the economy. The empirical analysis is anchored on the Heller type fiscal response modeling analytical framework and combines several procedures in modern econometric analysis/estimation techniques. The findings show that aid inflows had significant impact on the fiscal reactions of government in Nigeria: government expenditure, particularly capital (development) expenditure, increased in response to aid flows, tax efforts were relaxed, while domestic borrowing declined. Aid flows also provide free resources to increase recurrent (routine) spending, thus confirming the aid fungibility hypotheses. Since aid inflows cannot be permanently relied upon, it is advised that the government place a premium on improving its tax efforts as well as cut down recurrent expenditures. [ABSTRACT FROM AUTHOR]

The empirical results of this study show the importance of the composition of different government expenditure and revenue categories in analyzing the effects of fiscal policy variables on private investment which are often masked when only aggregate fiscal variables are used. When total government revenue and expenditure are regressed on private investment, the results revealed no significant relationships. However, different categories of expenditures and revenues have different impact on private investment. Moreover, relationships between specific fiscal categories and investment appear to be nonlinear. In particular, we show that when total revenue and total expenditure are studied together along with their quadratic terms, total revenue shows a decreasing return and significant negative influence on private investment only in quadratic term while total expenditure reveals an increasing but insignificant positive impact both in levels and quadratic term. [ABSTRACT FROM AUTHOR]