Privatization, Fiscal Policy and Macro-Economic Aggregates in Nigeria “An Impact Analysis”

Abstract

Aims: This study investigates the impact of privatization on fiscal policy and its interactional effects on macroeconomic aggregates in Nigeria. Study Design: Case Study (Nigeria). Place and Duration of Study: Nigeria, Time Series Data ranging from 1986 to 2012. Methodology: The study employs Ordinary Least Square method of estimation on a range of structural equation models- Auto-regressive Distributed Lag Model (ARDL) and Granger Causality Wald Test. Results: Shows that a percentage increase in privatization proceed increases Nigeria’s fiscal responsibility significantly by 13.49% but a percentage increase in the lag of privatization proceed decreases current government expenditure by about 6.3%, though this is not significant. Privatization proceed leads to growth in government expenditure, per capita expenditure, unemployment rate, exchange rate, and GDP with a feedback effect from unemployment rate and GDP. Government expenditure responds to self- produced shocks and transmits positive shock on privatization proceed, but privatization does not produce significant responses and/or shocks to government expenditure. It also does not produce/transmit positive shocks to per capita expenditure, unemployment rate and on itself. Conclusion: Our findings in this study revealed that privatization impacted significantly on government expenditure. There is also a healthy interrelationship with privatization and other macro-economic aggregates in the areas of causality and shock responses. Therefore we conclude given the obtained results, that the intensification of privatization of public enterprises should make the country better off.