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Public Expenditure and National Income: Time Series Evidence from Nigeria

Author

Listed:
  • E. Chuke Nwude

    (Department of Banking and Finance, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu, Nigeria,)

  • Tarila Boloupremo

    (Department of Banking and Finance, Faculty of Business Administration, University of Nigeria, Enugu Campus, Enugu, Nigeria,)

Abstract

The paper investigates the relationship between national income and government aggregate expenditure in Nigeria by testing the validity of Wagner’s law and Keynes’s hypothesis for the period between 1970 and 2014. More specifically, by applying time-series analysis, government-spending and national-income variables were found to be non-stationary and cointegrated, thus satisfying a long-run equilibrium condition. In addition, through the application of Granger causality tests to error correction models, unidirectional causality, running from Gross Domestic Product (GDP) to government-expenditure variables, could be established between the variables and, therefore, only Wagner’s law was found to be valid in Nigeria’s case for the period of study.

Suggested Citation

  • E. Chuke Nwude & Tarila Boloupremo, 2018. "Public Expenditure and National Income: Time Series Evidence from Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 8(1), pages 71-76.
  • Handle: RePEc:eco:journ1:2018-01-9
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Public expenditure; Wagner's law; unit roots; cointegration;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • P44 - Economic Systems - - Other Economic Systems - - - National Income, Product, and Expenditure; Money; Inflation

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