Title: FISCAL POLICY OPERATIONS AND EXTERNAL TRADE DYNAMICS: RELEVANCE TO FINANCIAL EDUCATION IN NIGERIA

Authors: Michael, Saro S., Phd, Thomas, Bariere, Phd and Ikole Dornubari, Phd

Abstract: This study investigates how fiscal policy operations, disaggregated into government capital expenditure (GCE), government recurrent expenditure (GRE), and deficit financial management (DFM) affect Nigeria’s foreign‑trade performance (trade intensity) over 1990–2024 using ARDL bounds testing, ADF unit‑root tests and error‑correction estimation. The results show a stable long‑run relationship between trade intensity and fiscal operational variables, with GCE exerting a positive and significant long‑run effect, GRE showing an insignificant long‑run effect, and deficit financing gap exerting a negative and statistically significant short‑run effect. The findings imply that fiscal composition and financing modalities matter more than headline spending: sustained public capital investment supports trade performance, while deficits and poorly targeted recurrent spending undermine it. Policy recommendations include prioritizing trade‑enabling public investment education, improving public investment management and project readiness, reorienting recurrent spending toward trade‑supporting services, and strengthening revenue mobilization and promoting deficit financing education.

Keywords: Fiscal Policy, Trade Intensity, Government Capital Expenditure, Fiscal Deficit, Trade Openness.

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