The objective of this study is to empirically investigate the long run and short run dynamic impact of interest rate and output on gross domestic savings and gross capital formation in Nigeria. Literatures, both theoretical and empirical, suggest that the rate of interest and output are the key factors influencing savings and investments. A review of factors influencing interest rates and output in Nigeria is necessitated by the recent economic downturns in Nigeria that has resulted in tight monetary policy which some commentators regard as inimical to growth. Employing Ordinary Least Squares, Co-integration, Error Correction Mechanism and Granger Causality econometric techniques on a data spanning 1981 to 2014 of the Nigerian economy sourced from the World Development Index, it was found that changes in output explains the long run and short run dynamic behaviour of gross domestic savings and gross capital formation which were used as proxies for savings and investment respectively. Whereas, a bi-causality was established between output and investment, causality flowed from output to savings in Nigeria. The research also found that interest rate is not a significant determinant of savings and investment in Nigeria in both long run and short run. It is therefore recommended that to enhance investment in a period of economic downturn in Nigeria, aggregate demand should be boosted to enhance output through vigorous pursuit of fiscal policy while implementing contractionary monetary policy to address inflationary pressures created by the increase in demand. Domestic savings will improve and gross capital formation will be sustained.

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Purpose — This study examines the effect of Government Expenditure (GE) on key sectors of the economy and Stock Market Performance (SMP) in Nigeria.Method — Statistics Bulletin published by the Central Bank of Nigeria (CBN) was utilized as source for time series data between 1980 and 2021. SMP is proxied with MCAP and ASI while expenditure on agriculture, defense, education, and health formed components of government expenditure. The FM-OLS and ARDL methodology were adopted to determine the GE's short and long-term impact on SMP in Nigeria. ADF unit root testing, correlation analysis, Engle and Granger co-integration analysis, and preliminary descriptive statistics testing were all carried out.Result — The outcome indicates that all through the long and short term, GE on education, defense and agriculture have significant influence of SMP in the long run via MCAP channel. GE on defense and agriculture significantly affects SMP in the short run via ASI channel. Hence, this study concludes that GE components are key determinants in explaining the effect of government spending on SMP in Nigeria. The magnitude of this effect is a function of stock market proxy used.Contribution — This study provides empirical evidence on the impact of government spending on key sectors of the economy on stock market performance in Nigeria using two proxies (market capitalization and all share index) in short run and longrun.