An econometric explanation of government expenditure behaviours in Nigeria: the open economy approach

This study adopted the exploratory approach to identify the short and long-run determinants of public sector behaviours in Nigeria using the error correction model and the econometric dynamic model. Research results show that total government expenditures, total government capital expenditures and total government recurrent expenditures increased sharply though at a gradual annual rate between 1987 and 2023. The error correction model result show that in the short run, school enrolment, population, market capitalisation, government size, FDI, exports and debt servicing costs have negative relationships with total government capital expenditures; while foreign exchange reserves, RGDP, oil revenues, non-oil revenues, net credit to government, local debt, imports and foreign debts have positive relationships with total government capital expenditures. To improve economic indices, the government should consider existing relationships between the explanatory and dependent variables, and increase in the proportion of government capital expenditures with attendant improvement in future sustaining income flows/economic performance.