DOI: 10.36347/sjebm.2014.v01i09.006

Pages: 423-427

The study seeks to analyze the effect of fiscal policy on capital formation in Nigeria. The major objective of the study is to ascertain the extent fiscal policy measures have improved or otherwise the quantum of capital stock available for investment, consumption, and savings purposes. The problem is that the desired capital stock for investment has fallen short of the actual quantum required for such purposes despite the fiscal policy measures put in place to stimulate the desired quantum. The objectives and hypotheses could be tested and empirically investigated using the multiple regression model and correlation analysis. The t-test statistic were used to test the effect of the explanatory variables on the dependent variable. Data is gotten through both primary and secondary sources. Most secondary data is gotten from the Central Bank of Nigeria Statistical bulletin of various issues. The study recommends that domestic prices, exchange rate, interest rate and other macroeconomic indicators should be fine tuned to desired magnitudes to enhance the efficacy of the fiscal policy tools in boosting capital formation.