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Testing Wagner’s Law in Nigeria in the Short and Long-run

Author

Listed:
  • Awode Segun Subair

    (Nigerian Institute of Social and Economic Research (NISER))

  • Akpa Emeka Okoro

    (Olabisi Onabanjo University)

Abstract

This study tests Wagner’s law in Nigeria in both the short and long-run using the autoregressive distributed lag (ARDL) technique of estimation and controlling for structural breaks between the periods 1981-2016. Results showed that both in the short and long-run, evidence pointed to a negative but insignificant relationship between government expenditure and economic growth, with a larger negative effect in the long-run. The study controlled for oil export earnings, which was found to positively and significantly influence government spending in both the short and long-run. Results did not support the Wagner law. It was therefore recommended that the economy be diversified into more labour intensive sectors so as to increase output and income per capita and so that government expenditure can be based more on tax receipts than on oil export earnings as more financially responsible households will demand increase in government expenditure as their level of income increases, especially for the provision of public sector services the households currently bear.

Suggested Citation

  • Awode Segun Subair & Akpa Emeka Okoro, 2018. "Testing Wagner’s Law in Nigeria in the Short and Long-run," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 14(7), pages 7-23, DECEMBER.
    • Handle: RePEc:dug:actaec:y:2018:i:7:p:7-23
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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/5077/4762
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    Cited by:

    1. Obiakor, Rowland & Okwu, Andy & Akpa, Emeka, 2021. "Terms of Trade, Trade Openness and Government Spending in Nigeria," MPRA Paper 110977, University Library of Munich, Germany.
    2. Nosakhare Liberty Arodoye, 2024. "Public Finance Instruments And Output Growth In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 11(1), pages 38-56.

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    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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