Government Expenditures and Economic Growth: The Nigerian Experience

Olulu, Robinson Monday; Erhieyovwe, Eravwoke Kester; Andrew, Ukavwe

doi:10.5901/mjss.2014.v5n10p89

Cited by 22 publications

(19 citation statements)

References 6 publications

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“…The results from the model estimation shows that public expenditure has a significant and positive implication on the level of economic growth in Nigeria even though the relative adjustment is found to be low. This finding is consistent with the Keynesian approach which established that increase in public expenditure will encourage aggregate demand and output growth and further supported by enormous literature including the contribution of [9,14,25]. Hence, a stable relationship is established between government expenditure and economic growth in Nigeria.…”

Section: Results For Ardl Bound Testsupporting

confidence: 87%

“…Furthermore, using annual time series data from 1980 to 2010, [14] examine the effects of government expenditure and economic growth in Nigeria. Cointegration and OLS estimation technique were used for the estimation and findings reveals that there exists a long-run relationship between aggregate government expenditures and economic growth in Nigeria.…”

Section: Keynesian Hypothesismentioning

confidence: 99%

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Public Sector Spending and Economic Growth in Nigeria: In Search of a Stable Relationship

Idris

Bakar

2017

ARJASS

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In this study, recent development in government expenditure and epistemological literatures on the relationship between public spending and economic growth in Nigeria are examined. The primary aim of this paper is to explore the relationship between government expenditure and economic growth with the view to establishing a stable relationship. In view of that, an ARDL model is employed to provide the framework for estimating the existence or otherwise of the equilibrium relationship among the examined variables. However, government as an institution that provide welfare to the populace has a major role to play in deciding where priority spending should be allocated in order to enhance the developmental process and provide sustainable growth in the growing economy. In all submissions that debated on the relationship between public sector spending and economic growth, Keynesian philosophy was among the most prominent and celebrated in contrast to Wagner's Law. Keynes regards government spending as an exogenous factor which can be utilised as a policy instrument to promote economic growth. Despite the diverse and conflicting empirical evidence on the relationship between public sector expenditure and economic growth that prevail in the literature, the empirical findings from this paper based on the estimated result from ARDL model reveals the existence of positive and significant relationship between public spending on economic growth in Nigeria. Undeniably, government expenditures are considered to be highly important in creating opportunities and widening the productive base at Review Article 2 which developing countries can grow, Nigeria is inclusive. To achieve accelerated economic growth, there is need for an in-depth and broad macroeconomic reform in the Nigerian public finance to include certain features of transparency and effectiveness in the implementation of budgetary process. An essential part of the reform policy should be the review of public sector's roles and responsibilities in the development process and concentrate on the priority areas rather than act as a substitute of the private sector. The inclusion of certain measures on the reform policy will appear satisfactory, for instance, expenditure on public goods that improves the allocative efficiency in the presence of positive externalities should be accorded high priority, including investment in infrastructure, more access to information and communication technology, expenditure on research and development, as well as diversification of the economy.

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Section: Results For Ardl Bound Testsupporting

confidence: 87%

Section: Keynesian Hypothesismentioning

confidence: 99%

Public Sector Spending and Economic Growth in Nigeria: In Search of a Stable Relationship

Idris

Bakar

2017

ARJASS

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“…The traditional expenditure-growth model specification by Jelilov and Musa [39] and Olulu et al [40], who relied on Keynesian theory and on Wagner's Law of public expenditure, is expanded to include financial development vector:…”

Section: Model Specificationmentioning

confidence: 99%

Effects of Public Expenditure and Financial Development on Economic Growth: Empirical Evidence from Nigeria

Adedeji

Jiddah

Tizhe

2019

JEMT

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The relationship between economic growth, government expenditure and financial development has widely explored but the latter has separately been modelled. Modelling the trio in a single linear model may generate new information. This study examines the effects of disaggregated public expenditure and financial development indicators on economic growth, focusing on Nigeria. Time series data, spanned between 1981 and 2016, were collected and analyzed using ordinary squares technique. We find that specification of the expenditure-growth model with financial development is valid. All the disaggregated financial development and public expenditure indicators have significant effects on economic growth, with positive regression signs except two-financial private sector credit and recurrent expenditure-directionally different. The effect of the former is more dominant, signaling important policy implication considering economic growth of Nigeria.

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“…However, empirically the nature of the relationship between government expenditure and economic growth remains an extensive debate between researchers. According to Olulu, Erhieyovwe and Andrew (2014) cumulative government expenditure is detrimental to economic growth mainly due to that expenditure by government is associated with tax burden particularly on personal income. As a result, a large part of labor force is discouraged from working extended hours or even job hunting.…”

Section: Introductionmentioning

confidence: 99%

Government Expenditure and Economic Growth in South Africa: A Vector Error Correction Modelling and Granger Causality Test

Molefe¹,

Choga²

2017

JEBS

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Previous studies generally find mixed empirical evidence on the relationship between government spending and economic growth. This study re-examine the relationship between government expenditure and economic growth in South Africa for the period of 1990 to 2015 using the Vector Error Correction Model and Granger Causality techniques. The time series data included in the model were gross domestic Product (GDP), government expenditure, national savings, government debt and consumer price index or inflation. Results obtained from the analysis showed a negative long-run relationship between government expenditure and economic growth in South Africa. Furthermore, the estimate of the speed of adjustment coefficient found in this study has revealed that 49 per cent of the variation in GDP from its equilibrium level is corrected within of a year. Furthermore, the study discovered that the causality relationship run from economic growth to government expenditure. This implied that the Wagner’s law is applicable to South Africa since government expenditure is an effect rather than a cause of economic growth. The results presented in this study are similar to those in the literature and are also sustained by preceding studies.

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Government Expenditures and Economic Growth: The Nigerian Experience

Cited by 22 publications

References 6 publications

Public Sector Spending and Economic Growth in Nigeria: In Search of a Stable Relationship

Public Sector Spending and Economic Growth in Nigeria: In Search of a Stable Relationship

Effects of Public Expenditure and Financial Development on Economic Growth: Empirical Evidence from Nigeria

Government Expenditure and Economic Growth in South Africa: A Vector Error Correction Modelling and Granger Causality Test

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