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Government spending and economic growth: evidence from Nigeria

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  • Aladejare, Samson Adeniyi

Abstract

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

    as
    1. Alan T. Peacock & Jack Wiseman, 1961. "The Growth of Public Expenditure in the United Kingdom," NBER Books, National Bureau of Economic Research, Inc, number peac61-1, July.
    2. 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. Yaru, M.A. & Mobolaji, H.I. & Kilishi, A. A. & Yakubu, A.T., 2018. "Public Expenditure And Inclusive Growth In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 5(5), pages 46-61, June.
    3. 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.
    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.
    5. Samson Adeniyi Aladejare, 2022. "Are public spending determinants significant in per capita budget spending decisions in Nigeria?," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 192-206, January.
    6. David Sunday, Oyerinola, & Muftau Adesina, Abayomi, & Salihu Otubu, Alabi,, 2017. "The Nexus Between Agricultural Capital Expenditure And Economic Growth In Nigeria," Ilorin Journal of Business and Social Sciences, Faculty of Social Sciences, University of Ilorin, vol. 19(1), pages 43-54, October.
    7. Hafiz Saqib Mehmood Najmi & Farrukh Bashir & Saman Maqsood, 2013. "Is Fiscal Policy Effective In Generating Higher Real Output? A Case Of Pakistan," Pakistan Journal of Humanities and Social Sciences, International Research Alliance for Sustainable Development (iRASD), vol. 1(2), pages 47-58, December.
    8. 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.
    9. Shazia Kousar & Saeed Ahmad Sabir & Farhan Ahmed & Štefan Bojnec, 2022. "Climate Change, Exchange Rate, Twin Deficit, and Energy Inflation: Application of VAR Model," Energies, MDPI, vol. 15(20), pages 1-21, October.
    10. 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.

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    More about this item

    Keywords

    Economic growth; Capital expenditure; Recurrent expenditure; Vector Error Correction; Causality;
    All these keywords.

    JEL classification:

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

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