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Does The Relationship Between Government Expenditure And Economic Growth Follow Wagner’s Law In Nigeria?


  • Clement A.U. Ighodaro

    () (University of Lagos, Akoka, Nigeria)

  • Dickson E. Oriakhi

    () (University of Benin, Nigeria)


While previous studies to test Wagner’s hypothesis for Nigeria used total government expenditure, this paper in addition to total government expenditure used a disaggregated government expenditure data from 1961 - 2007, specifically; expenditure on general administration and that of community and social services to determine the specific government expenditure that economic growth may have significant impact on. Economic conditions and policies change implying that it is not only economic growth that can affect government expenditure hence the inclusion of other fiscal policy variable and political freedom to augment the functional form of Wagner’s law. All the variables used were found to be I(1) and long run relationship exist between the dependent and the independent variables except in the case where only GDP was used as the independent variable. Wagner’s hypothesis does not hold in all the estimations rather Keynesian hypothesis was validated in all the estimation. Elasticity estimates and Granger causality results are in agreement.

Suggested Citation

  • Clement A.U. Ighodaro & Dickson E. Oriakhi, 2010. "Does The Relationship Between Government Expenditure And Economic Growth Follow Wagner’s Law In Nigeria?," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 10(2), pages 185-198.
  • Handle: RePEc:pet:annals:v:10:y:2010:i:2:p:185-198

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    Cited by:

    1. Abutu, Usman Ojonugwa & Agbede, Esther Abdul, 2015. "Government Expenditure and Economic Growth in Nigeria: A Cointegration and Error Correction Modelling," MPRA Paper 69676, University Library of Munich, Germany, revised 15 Aug 2015.
    2. repec:eso:journl:v:47:y:2016:i:1:p:69-103 is not listed on IDEAS
    3. repec:eco:journ1:2018-01-9 is not listed on IDEAS
    4. Khatai Aliyev & Orkhan Nadirov, 2016. "How Fiscal Policy Affects Non-Oil Economic Performance in Azerbaijan?," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 2(3), pages 11-29, September.
    5. Ibok, Otu William & Bassey, Nsikan Edet, 3. "Wagner’S Law Revä°Sä°Ted: The Case Of Nigerian Agricultural Sector (1961 €“ 2012)," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(3).
    6. Falade Olanipekun Emmanuel & Olagbaju Ifeolu Oladiran, 2015. "Effect of Government Capital Expenditure on Manufacturing Sector Output in Nigeria," Business and Economic Research, Macrothink Institute, vol. 5(2), pages 136-152, December.
    7. Bashir Olayinka Kolawole, 2016. "Government Spending and Inclusive-Growth Relationship in Nigeria: An Empirical Investigation," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 19(2), pages 33-56, November.
    8. Chinwuba Okafor & Ibrahim Shaibu, 2016. "Modelling Economic Growth Function in Nigeria: An ARDL Approach," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 3(1), pages 84-93.
    9. Usman, Ojonugwa & Agbede, Esther Abdul, 2015. "Government Expenditure and Economic Growth in Nigeria: A Cointegration and Error Correction Modeling," MPRA Paper 69814, University Library of Munich, Germany, revised 01 Mar 2016.

    More about this item


    Wagner law; Keynesian Hypothesis; Granger Causality and Cointegration;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government


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