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The Dynamic Correlation between Fiscal Spending on Education, Health, Consumption and Standard of Living in Nigeria

Author

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  • Anuli R. Ogbuagu

    (Department of Economics and Development Studies, Alex-Ekwueme Federal University Ndufu Alike Ikwo, Ebonyi State, Nige)

  • Dennis B. Ewubare

    (Department of Agric and Applied Economics, Rivers State University Nkpolu-Oroworokwu, Port Harcourt Rivers State, Nigeria.)

Abstract

The fiscal spending of the government have always been a strong instrument towards achieving development and recovering economy from recession. This paper investigates the long run and short run impact of three component of government expenditure (education, health, and consumption expenditure) on standard of living in Nigeria with time series data from 1981 to 2017. The study employs ordinary least square method of estimation on a range of equation models: Vector Error Correction Model (VECM) and the Impulse Responses Function Model. The result shows that fiscal spending on education, health, and consumption have a long run relationship with standard of living in Nigeria and the speed of adjustment towards long run equilibrium is 61.45%, moderately high. The short run coefficient results reveals that education expenditure in both lag 1 &2 have a positive and significant impact on standard of living while health and consumption expenditure have insignificant impact on standard of living in Nigeria. Using Impulse Response Function model, we found that none of our fiscal spending variables (education expenditure, health and consumer spending) were able to emit positive impulses/shocks on the standard of living in Nigeria. The study recommends that government should ensure that fiscal spending on education, health, and consumption should be well managed, accounted for and the method should be transparent to the populace.

Suggested Citation

  • Anuli R. Ogbuagu & Dennis B. Ewubare, 2019. "The Dynamic Correlation between Fiscal Spending on Education, Health, Consumption and Standard of Living in Nigeria," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 259-267.
    • Handle: RePEc:eco:journ1:2019-03-27
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    References listed on IDEAS

    as
    1. Devarajan, Shantayanan & Swaroop, Vinaya & Heng-fu, Zou, 1996. "The composition of public expenditure and economic growth," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 313-344, April.
    2. Alok Bhargava, 1986. "On the Theory of Testing for Unit Roots in Observed Time Series," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(3), pages 369-384.
    3. Arusha Cooray, 2009. "Government Expenditure, Governance and Economic Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 51(3), pages 401-418, September.
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    Cited by:

    1. Joseph Afamefuna Nduka & Amalachukwu Chijindu Ananwude & Charity Ifunanya Osakwe, 2019. "Expenditure of the Federal Government of Nigeria: Effect on the Standard of Living of her Citizens," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(4), pages 57-64, October.

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    More about this item

    Keywords

    fiscal spending; education; health; consumption; standard of living;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education

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