Responsiveness of Construction Sector to Fiscal Policy in Nigeria

Abstract

The influence of fiscal policy measures on the economy is reflective of sectorial outputs like the Construction industry sector (CS) in Nigeria. However, the extent of the influence is vague making their interaction a concern, etc. This study investigated and examines the casualty and relationship between the Construction sector (CS) and selected fiscal policy measures like government revenue, public capital expenditure, gross fixed capital formation, and deficit finance as study variables. Using time series data of the study variables between 1980-2019, analyzed using the Co-Integration estimation technique (Bound Test approach of Auto Regressive Distributive Lag (ARDL)) and Pairwise casualty technique. The study findings show that a long-run and short-run relationship amongst all the variables was established but not significant except for Government Revenue. Similarly, the Pairwise Granger causality test confirmed that deficit financing and public capital expenditure have no casualty effect on CS. It concluded that CS is not responsive to changes in fiscal policies in Nigeria, and subsequently recommended the need for increased public and private capital investment, improvement in revenue generation, and efficient use of debt revenue on infrastructure development to strengthen domestic growth across economic sectors.