Government spending and economic growth: evidence from Nigeria

Aladejare, Samson Adeniyi (2013): Government spending and economic growth: evidence from Nigeria.

Abstract

This study examines the relationships and dynamic interactions between government capital and recurrent expenditures and economic growth in Nigeria over the period 1961 to 2010. Real Gross Domestic Product (RGDP) was used as a proxy for economic growth in the study.The analytical technique of Vector Error Correction Model and Granger Causality were exploited. Based on the result findings, it is evident that the Wagnerian and Rostow-Musgrave hypothesis were applicable to the relationship between the fiscal variables used in this study in Nigeria. The study therefore recommended among others that: there should be effective channeling of public funds to productive activities, which will have a significant impact on economic growth; there should be joint partnership between the government and the private sector in providing essential infrastructural services that will promote economic growth and development, etc.

• Item Type: MPRA Paper
• Language: English
• Keywords: Economic growth, Capital expenditure, Recurrent expenditure, Vector Error Correction, Causality
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

References

Adubi, A.A.A Fajingbesi and E.C. Obioma, (1995). Public Expenditure and Management under the Current Economic Dispensation. In Obadan, M.I. and G.O. Ogiogio, eds, Planning and Budgeting in Nigeria: Institution and Policy Reforms, Ibadan: NCEMA. Aigbokhan, B.A. (1997). Fiscal Decentralization Wagner’s Law and Government size: The Nigerian Experience. Journal of Economic Management. 4(2):32-40

B.C. Olapade and D.O. Olapade (2010). The Impact of Government Expenditure on Economic Growth and Development in Developing Countries: Nigeria as a case study. Department of Economics, Igbinedion University Okada, Edo State, Nigeria.

Central Bank of Nigeria Statistical bulletin, 2009 edition

Central Bank of Nigeria Statistical bulletin, golden jubilee edition 2010.

Diamond Jack, (1990). Fiscal indicators for economic growth: an illusory search? IMF Working Paper (August).

Ekpo A.H, (1995). Public Expenditure and Economic Growth in Nigeria, 1960-1992.Final Report, AERC, Nairobi Kenya.

Fajingbesi AA, Odusola AF, (1999). Public Expenditure and Growth. A Paper Presented at a Training Programme on Fiscal Policy Planning Management in Nigeria, Organized by NCEMA, Ibadan, Oyo State, 137-179.

Granger, C.W.J. (1969). Investigating the Causal Relations by Econometric Models and Cross-Spectral Methods. Econometrica, 37(3), pp. 424-238.

Musgrave R.A and P.M, Musgrave (1989). Public finance in theory and practice. New York, McGraw hill.

National Bureau of Statistics statistical bulletin 2011. Niloy B., M. Emranul H. and Denise R.O. (2007). Public Expenditure and Economic Growth: A Disaggregated Analysis for Developing Countries. The Manchester School volume 75, NO. 5 (September).

Odusola f. Adeyodele, (1996). Military Expenditure and Economic Growth. The Nigerian Journal of economic and social studies 38 (1, 2 &3).

Odusola f. Adeyodele, (1996). Military Expenditure and Economic Growth. The Nigerian Journal of economic and social studies 38 (1, 2 &3). of Econometrics, 39, pp. 199-211.

Ogba Likka, (1999). Elements of public finance. T.O.Abayomi industrial packaging ltd, Agege.

Ogiogio GO, (1995). Government Expenditure and Economic Growth in Nigeria. Journal of Economic Management.

Oluranti S. Komolafe, Hossein Jallian, Mark Hiley, (1999). Fiscal policy planning and management in Nigeria. National Centre for Economic Management and Administration (NCEMA), Ibadan.

Oyinlola .O. (1993). Nigeria’s National Defence and Economic Development: An Impact Analysis. Scandinavian Journal of Development Alternatives, 12(3).

Peacock, A.T. and Wiseman, J. (1961). The Growth of Public Expenditure in the United Kingdom. Allen and Urwin, London.

World Development Report, 1994.