Government Expenditure and Its Implication for Economic Growth: Evidence from Nigeria
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Date
2015
Journal Title
Journal ISSN
Volume Title
Publisher
Journal of Economics and Sustainable Development www. iiste
Abstract
Government Expenditure is an important macroeconomic objective in an economy. In this study, the structure
and size of government expenditure determine the pattern of growth in the economy. The Keynesian aggregate
expenditure is adopted as a framework to explain the role of government spending on output. The Johansen
cointegration test was applied to verify the long run relationship between the variables and the Granger causality
test was employed to determine the existence and direction of causation between government expenditure and
economic growth. The autoregressive distributed lag (ARDL) methodology was employed to examine the
relationship between the independent variables and the dependent variable. From the analysis and findings,
government spending significantly and positively explained the economic growth of the country. The
relationship was significant at 5 percent level. In comparing the results of the total government expenditure with
capital and recurrent expenditure, the result shows that they are positively related to economic growth however
the recurrent component of the expenditure significantly explained more. Therefore, it is recommended that the
government should give more priority to the capital component that is more productive and can induce rapid
economic prosperity
Description
Keywords
Government expenditure, Economic growth, Ordinary least square
Citation
Danladi, J. D., Akomolafe, K. J., Olarinde, O. S., & Anyadiegwu, N. L. (2015). Government Expenditure and Its Implication for Economic Growth: Evidence from Nigeria. Government Expenditure and Its Implication for Economic Growth: Evidence from Nigeria, 6(18), 1-10.