An Empirical Retrospect of the Impacts of Government Expenditures on Economic Growth: New Evidence from the Nigerian Economy

Onifade, Stephen Taiwo; Çevik, Savaş; Erdoğan, Savaş; Asongu, Simplice A.; Bekun, Festus Victor

doi:10.2139/ssrn.3513327

Cited by 5 publications

(9 citation statements)

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“…On the other hand, [53] found that recurrent expenditures of government are significantly impacting on economic growth in a negative way while the positive impacts of public capital expenditures are not significant to economic growth. A related study by [16] indicated that government spending on transport and communication, education and health infrastructure has significant effects on economic growth; whereas spending on agriculture and natural resources infrastructure recorded a significant inverse effect on economic growth in Nigeria.…”

Section: Theoretical Framework and Empirical Reviewmentioning

confidence: 96%

“…Empirically, scholars have expressed divergent views on whether public investments in construction sector propel economic growth or vice versa [16,20,26,[44][45][46][47], and especially in Nigeria [3,19,[48][49][50][51][52][53]. However, the perceived need of investments in construction sector is directly dependent on the state of economy and government fiscal and monetary policies [54].…”

Section: Theoretical Framework and Empirical Reviewmentioning

confidence: 99%

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Driving Public Investments in Construction Sector for Economic Growth in Nigeria: A Synthesis of Wagnerian and Keynesian Hypotheses

Okoye¹

2021

ujm

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This study investigated the relationship between public investments in construction sector and economic growth in Nigeria. The study deployed econometric statistics to examine the existence of Wagner's Law and Keynesian Theory in Nigeria using published economic and construction sector data. It found that federal government capital expenditure influences economic growth negatively (t=-2.837, p(0.0084)<0.05), while the recurrent expenditure on construction sector has a positive and significant long-run and short-run influence (t=10.315, p(0.0000)<0.05) on economic growth with a causal effect flowing from construction expenditure to GDP without feedback. The study further established that the aggregate construction investments have potential to grow the economy regardless of effects of capital expenditure ((F=8.19> I(0)=3.10 and I(1)=3.87); ECM(-1)=-0.196, p=0.000<0.05)); but for corruption, misapplication and diversion of capital project budgets. Although, this study partly confirmed the existence of Keynesian Theory, it cannot conclusively establish that construction investments stimulate economic growth in Nigeria. This signified that Nigerian economic models are defective and/or ineffective in transforming the huge capital spending on construction sector to economic growth, thereby making investment in construction sector an irrelevant strategy for economic policy formulation. It then placed the burden of economic rejuvenation through investments in construction sector on economic policy and decision makers in Nigeria. It recommended for diligence in budgeting and implementation of capital projects as the only way the capital expenditure can contribute to a meaningful economic growth.

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Section: Theoretical Framework and Empirical Reviewmentioning

confidence: 96%

Section: Theoretical Framework and Empirical Reviewmentioning

confidence: 99%

Driving Public Investments in Construction Sector for Economic Growth in Nigeria: A Synthesis of Wagnerian and Keynesian Hypotheses

Okoye¹

2021

ujm

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“…Jibir & Aluthge, 2019a ;Jibir, et al, 2018;Nurrudeen & Usman, 2010;Olayungbo & Olayemi, 2018;Onifade, et al, 2020;Usman et al, 2011) overlooked it in their methodological approaches which may affect the reliability of their findings. The few available studies (Awode & Akpa, 2018;Oyinlola & Akinnibosun, 2013) that incorporated structural break analysis are mostly not up to date and did not address the issue of converting the capital investment, as a flow variable, to capital stock.…”

Section: -174mentioning

confidence: 99%

Impact of Government Expenditure on Economic Growth in Nigeria, 1970-2019

Aluthge

Jibir

Abdu

2021

CBN-JAS

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This study investigates the impact of Nigerian government expenditure (disaggregated into capital and recurrent) on economic growth using time series data for the period 1970-2019. The paper employs Autoregressive Distributed Lag (ARDL) model. To ensure robustness of results, the study accounts for structural breaks in the unit root test and the co-integration analysis. The key findings of the study are that capital expenditure has positive and significant impact on economic growth both in the short run and long run while recurrent expenditure does not have significant impact on economic growth both in the short run and long run. The study recommends that government should increase the share of the capital expenditure especially on meaningful projects that have direct bearing on the citizen’s welfare. Government should also improve the spending patterns of recurrent expenditure through careful reallocation of resources toward productive activities that would enhance human development in the country.

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“…Capital expenditure is a spending on activities that the benefits derived by the citizen spans for a very long-term, such as capital expenditure on social services, and capital expenditure on transfers. Current expenditure are expenses incurred on daily running of the government affairs (Awode, 2019;Onifade et al, 2020).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Moreover, studies have shown that despite the previous increase in tax and non-tax revenue by the government, the economy is still wallowing in high rate of inflation, high interest rates, high unemployment rate, low capacity utilization of oil industry and high exchange rate (Central Bank of Nigeria, 2019), low per capital income, accumulated debt, corruption, poor infrastructures, weak institutions, low investment (Okwori & Sule, 2016). Some investigators, Onifade, Cevik, Erdogan, Asongu, & Bekun (2020) opined that earning tax and non-tax revenue by the government is vital to every economy, and channeling the tax revenue and non-tax revenue to create the desired significant positive impact on the government expenditure that can result to the achievement of the economic goals and objectives of the nation and its citizens is the most important issue.…”

Section: Introductionmentioning

confidence: 99%

Trend Analysis of the Link Between Tax Reveneue, Non-Tax Revenue and Public Expenditure in Nigeria

Kaka¹

2020

JAROE

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Objective – The paper is aimed at examining the relationship between government tax revenue, non-tax revenue and government expenditure in Nigeria. Design/methodology – Quantitative research design was employed. Secondary data were collected from Central Bank of Nigeria statistical bulletin, World Bank, World Data Atlas and Federal Inland Revenue Service. The study covers the period of 2010 to 2018. Meanwhile descriptive statistics was used to analyzed the data. Results – The findings of the study discovered that, there is a relationship between government revenue and government expenditure, and the Nigerian government revenue and expenditure is in line with the spend-and-revenue hypothesis. That is government revenue only respond to previous changes in expenditure. Thus, government is expected to generate enough tax revenue to enable it meet government expenses as revenue from oil is decreasing. This signifies that whenever there is high government expenditure, it is required that government must raise higher revenue, and in Nigeria, government expenditure is always higher than the revenue resulting to budget deficit. In addition, tax revenue was found to have been increasing even though at a slower rate. Limitation/Suggestion - The study recommends that Nigerian government should cut down current expenditures on wages, acquisition of goods and services that are unnecessary and increase capital expenditure. Increase in capital expenditures on education, infrastructures and health care will boast the economic activity and which will in turn increases government tax revenue.

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An Empirical Retrospect of the Impacts of Government Expenditures on Economic Growth: New Evidence from the Nigerian Economy

Cited by 5 publications

References 0 publications

Driving Public Investments in Construction Sector for Economic Growth in Nigeria: A Synthesis of Wagnerian and Keynesian Hypotheses

Driving Public Investments in Construction Sector for Economic Growth in Nigeria: A Synthesis of Wagnerian and Keynesian Hypotheses

Impact of Government Expenditure on Economic Growth in Nigeria, 1970-2019

Trend Analysis of the Link Between Tax Reveneue, Non-Tax Revenue and Public Expenditure in Nigeria

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