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Government spending and economic growth: evidence from Nigeria


  • Aladejare, Samson Adeniyi


This study examines the relationships and dynamic interactions between government capital and recurrent expenditures and economic growth in Nigeria over the period 1961 to 2010. Real Gross Domestic Product (RGDP) was used as a proxy for economic growth in the study.The analytical technique of Vector Error Correction Model and Granger Causality were exploited. Based on the result findings, it is evident that the Wagnerian and Rostow-Musgrave hypothesis were applicable to the relationship between the fiscal variables used in this study in Nigeria. The study therefore recommended among others that: there should be effective channeling of public funds to productive activities, which will have a significant impact on economic growth; there should be joint partnership between the government and the private sector in providing essential infrastructural services that will promote economic growth and development, etc.

Suggested Citation

  • Aladejare, Samson Adeniyi, 2013. "Government spending and economic growth: evidence from Nigeria," MPRA Paper 43916, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:43916

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    References listed on IDEAS

    1. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
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    Cited by:

    1. Phindile Mdluli & Precious Mncayi & Thabang Mc Camel, 2019. "Examining Factors that Drive Government Spending in South Africa," Proceedings of International Academic Conferences 9912246, International Institute of Social and Economic Sciences.
    2. Ibrahim, Taofki, 2018. "Does Public Capital Influence Output Growth? Further Evidence from Nigeria," MPRA Paper 88635, University Library of Munich, Germany, revised 22 Jul 2018.
    3. Gilbert Deinde Ifarajimi & Kehinde Oluwole Ola, 2017. "Government Expenditure and Economic Growth in Nigeria: An Analysis with Dynamic Ordinary Least Squares," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 7(5), pages 8-26, May.
    4. Samson Adeniyi Aladejare, 2019. "Testing the Robustness of Public Spending Determinants on Public Spending Decisions in Nigeria," International Economic Journal, Taylor & Francis Journals, vol. 33(1), pages 65-87, January.

    More about this item


    Economic growth; Capital expenditure; Recurrent expenditure; Vector Error Correction; Causality;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy

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