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Government Spending and Economic Growth: A Revisit of the Nigerian Experience

Author

Listed:
  • Ekor, Maxwell
  • Adeniyi, Oluwatosin

Abstract

Given the continued debate surrounding the effectiveness and efficiency of government spending in Nigeria, this study adopts a modified Autoregressive Distributed Lag Model in order to investigate the impact of federal government spending on economic growth between 1961 and 2010. The main findings are that government total expenditure and recurrent expenditure have insignificant effect on real GDP growth irrespective of the lag period. However, capital expenditure has significant positive effect in the second lagged period. Nevertheless, the long run multiplier of government spending whether total expenditure, capital expenditure or recurrent expenditure, is negative. This means that in the long run real GDP growth is slowed by the negative government expenditure multiplier. The policy implication of the findings is that the quality and efficiency of government spending remains an issue in Nigeria as theory posits that the multiplier effect of government spending should be positive even if it is, as usual, lower than private sector investment multiplier.

Suggested Citation

  • Ekor, Maxwell & Adeniyi, Oluwatosin, 2014. "Government Spending and Economic Growth: A Revisit of the Nigerian Experience," MPRA Paper 107840, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:107840
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    References listed on IDEAS

    as
    1. Usman A & Mobolaji H. I & Kilishi A. A & Yaru M. A & Yakubu T. A, 2011. "Public Expenditure And Economic Growth In Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 104-113.
    2. Yaru, M.A. & Mobolaji, H.I. & Kilishi, A. A. & Yakubu, A.T., 2018. "Public Expenditure And Inclusive Growth In Nigeria," Ilorin Journal of Economic Policy, Department of Economics, University of Ilorin, vol. 5(5), pages 46-61, June.
    3. Muritala, Taiwo & Taiwo, Abayomi, 2011. "Government expenditure and economic development: empirical evidence from Nigeria," MPRA Paper 37293, University Library of Munich, Germany.
    4. Usman.A & Mobolaji H. I & Kilishi A.A & Yaru M. A & Yakubu, T. A, 2011. "Public Expenditure And Economic Growth In Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(3), pages 104-113, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Government Expenditure; Real GDP; Multiplier;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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