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The economic impact of Value Added Tax (VAT) that was implemented in Nigeria in 1994 has generated much debate in recent times, especially with respect to its effect on the level of aggregate prices. This study empirically examines the influence of VAT on price stability in Nigeria using partial equilibrium analysis. We introduced the VAT variable in the framework of a combination of structuralist, monetarist and fiscalist approaches to inflation modelling. The analysis was carried out by applying multiple regression analysis in static form to data for the 1994-2010 period. The results reveal that VAT exerts a strong upward pressure on price levels, most likely due to the burden of VAT on intermediate outputs. The study rules out the option of VAT exemptions for intermediate outputs as a solution, due to the difficulty in distinguishing between intermediate and final outputs. Instead, it recommends a detailed post-VAT cost-benefit analysis to assess the social desirability of VAT policy in Nigeria.

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As an aspect of human capital, a positive association exists amongst health, productivity, and growth in output per capita. On the other hand, social infrastructure defined by the institution of governance has a direct effect on the environment upon which productive activities take place to determine outcomes. Nigeria like most African countries is bedevilled by the high prevalence of inadequate health financing and poor governance. Health financing for Nigeria consistently has fallen short of the AU health funding commitment of 15% of annual budgetary allocation to the health sector. Secondly, poor governance conditions available resources and shape the state of infrastructure, particularly health infrastructure and socioeconomic conditions. In turn, this determines individuals’ level of exposure to health risks and their capacity to actively contribute to productive activity for growth stimulation and sustainability. Against this backdrop, this study added to the existing literature in the context of Nigeria, by theoretically applying the Solow augmented Mankiw-Romer-Weil structural model in the examination of the impact of government size and governance quality in the health sector, on economic growth. Autoregressive Distributed Lag (ARDL) model was adopted in the estimation. Findings show that governance quality adversely affects growth and this reduces the capacity of health spending to stimulate growth by an almost equal margin. As a result, this study recommends legislative backing to the AU health funding commitment in Nigeria.