Public Expenditure And Economic Growth In Nigeria
The debate on the use of fiscal policy for economic stabilization and inducement of economic growth is an old one. Key issue in this debate relates to the efficacy of public expenditure on stimulating economic growth. The neo-classical school held on extreme position by refuting the usage of fiscal policy to regulate the economy even in the time of economic crisis. At the other extreme are those who emphasize the efficiency of fiscal policy in stabilizing economic fluctuations and stimulating growth. There is nearly a consensus on the short-run effects of fiscal policy on the economy. Fiscal policy can temporarily raise or lower national income or counteract macroeconomic disturbances that would otherwise influence national output. This paper contributes to this debate by investigating the effect of federal government expenditure on economic growth in Nigeria. An augmented Solow model is specified in Cobb-Douglas form with public capital as one of the factors. Public expenditure is used as proxy for public capital which is further decomposed by sectors. This helps us to investigate the impact of each sector on economic growth. The decomposition is in three expenditure streams: (i) expenditure on building human capital- public expenditure on education and health; (ii) expenditure on building infrastructure- public expenditure on transport and communication, and other social services; and (iii) expenditure on administration which is necessary for the functioning of government; A multivariate time series framework is used. Augmented Dickey- Fuller test indicated that two of the variables are stationary at first difference while other variables are stationary at levels. While Phillips Peron tests show that three are stationary at levels and others at first difference. Results of the regressions show that in the short run public spending has no impact on growth. However, Cointegration and VEC results show that there is long run relationship between public expenditure and growth.
Volume (Year): 1 (2011)
Issue (Month): 3 (September)
|Contact details of provider:|| Postal: Sadeeq Block, Near Fawara Chowk, Abbasia Town, Rahim Yar Khan - 64200, Punjab, Pakistan|
Web page: http://www.aessweb.com/
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- William Easterly & Sergio Rebelo, 1993.
"Fiscal Policy and Economic Growth: An Empirical Investigation,"
NBER Working Papers
4499, National Bureau of Economic Research, Inc.
- Easterly, William & Rebelo, Sergio, 1993. "Fiscal policy and economic growth: An empirical investigation," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 417-458, December.
- Easterly, William & Rebelo, Sérgio, 1994. "Fiscal Policy and Economic Growth: An Empirical Investigation," CEPR Discussion Papers 885, C.E.P.R. Discussion Papers.
- Abu-Bader, Suleiman & Abu-Qarn, Aamer S., 2003.
"Government expenditures, military spending and economic growth: causality evidence from Egypt, Israel, and Syria,"
Journal of Policy Modeling,
Elsevier, vol. 25(6-7), pages 567-583, September.
- Suleiman Abu-Bader & Aamer Abu-Qarn, 2003. "Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria," Working Papers 163, Ben-Gurion University of the Negev, Department of Economics.
- Abu-Bader, Suleiman & Abu-Qarn, Aamer, 2003. "Government Expenditures, Military Spending and Economic Growth: Causality Evidence from Egypt, Israel and Syria," MPRA Paper 1115, University Library of Munich, Germany.
- Robert J. Barro, 1988.
"Government Spending in a Simple Model of Endogenous Growth,"
NBER Working Papers
2588, National Bureau of Economic Research, Inc.
- Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S103-26, October.
- Barro, Robert J., 1990. "Government Spending in a Simple Model of Endogeneous Growth," Scholarly Articles 3451296, Harvard University Department of Economics.
- Barro, R.J., 1988. "Government Spending In A Simple Model Of Endogenous Growth," RCER Working Papers 130, University of Rochester - Center for Economic Research (RCER).
- Christoph A. Schaltegger & Benno Torgler, 2004.
"Growth Effects of Public Expenditure on the State and Local Level: Evidence from a Sample of Rich Governments,"
CREMA Working Paper Series
2004-16, Center for Research in Economics, Management and the Arts (CREMA).
- Christoph Schaltegger & Benno Torgler, 2006. "Growth effects of public expenditure on the state and local level: evidence from a sample of rich governments," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1181-1192.
- Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996.
"The composition of public expenditure and economic growth,"
Journal of Monetary Economics,
Elsevier, vol. 37(2-3), pages 313-344, April.
- Shantayanan Devarajan & Vinaya Swaroop & Heng-fu Zou, 1996. "The composition of public expenditure and economic growth," CEMA Working Papers 77, China Economics and Management Academy, Central University of Finance and Economics.
- M E Haque & D H Kim, 2003.
"Public Investment in Transportation and Communication and Growth: A Dynamic Panel Approach,"
The School of Economics Discussion Paper Series
0324, Economics, The University of Manchester.
- M E Haque & D H Kim, 2003. "Public Investment in Transportation and Communication and Growth:A Dynamic Panel Approach," Centre for Growth and Business Cycle Research Discussion Paper Series 31, Economics, The Univeristy of Manchester.
- Olivier Blanchard & Roberto Perotti, 2002.
"An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 117(4), pages 1329-1368.
- Olivier Blanchard & Roberto Perotti, 1999. "An Empirical Characterization of the Dynamic Effects of Changes in Government Spending and Taxes on Output," NBER Working Papers 7269, National Bureau of Economic Research, Inc.
- Romp, Ward & de Haan, Jakob, 2005.
"Public capital and economic growth: a critical survey,"
2/2005, European Investment Bank, Economics Department.
- Ward Romp & Jakob de Haan, 2007. "Public Capital and Economic Growth: A Critical Survey," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 8(s1), pages 6-52, 04.
- A Badawi, 2003.
"Private Capital Formation and Public Investment in Sudan: Testing the Substitutability and Complementarity Hypotheses in a Growth Framework,"
The School of Economics Discussion Paper Series
0316, Economics, The University of Manchester.
- Ahmed Badawi, 2003. "Private capital formation and public investment in Sudan: testing the substitutability and complementarity hypotheses in a growth framework," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(6), pages 783-799.
When requesting a correction, please mention this item's handle: RePEc:asi:aeafrj:2011:p:104-113. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qazi Muhammad Imran)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.