Causal Relationship between Fiscal Responsibility Act and Economic Growth of Nigeria (1997-2021)

This study investigated the causal relationship between fiscal responsibility Act and economic growth of Nigeria (1997-2021) using secondary data from Statistical bulletin of Central Bank of Nigeria. The research work used the Granger Causality techniques to test the causal relationship between the independent variables (Total debt outstanding, total savings, retain revenue and total debt service payment) on the dependent variable (gross domestic product) while VAR was used to test the short run relationship. The study found that fiscal responsibility Act granger causes Nigeria economic growth within the period of the study. The study therefore advocates that Government should amend the Act in order to close the loopholes in the Act that have allowed corruption to thrive in the public sector. Nigerian Government should include the mechanisms for sanctioning operators in the public sector who violate the law. Nigerian government must also improve its revenue and close loopholes in revenue leakage, particularly with regard to the country's oil theft. Also, government should increase its tax revenue once more, by taxing the wealthy in proportion to their wealth while bringing in more informal sector in the tax bracket.