IMPACT OF GOVERNMENT EXPENDITURE ON NIGERIAS ECONOMIC GROWTH (1981-2013)

IMPACT OF GOVERNMENT EXPENDITURE ON NIGERIAS ECONOMIC GROWTH (1981-2013)

ABSTRACT

This study empirically examined the impact of Government expenditure on Nigeria’s economic growth between the period 1981-2013. The data for this research work was obtained from the CBN Statistical Bulletin for the relevant period under study and analysed using ordinary least square (OLS) regression technique. The empirical results were on Augmented Dickey Fuller test.  In the second step, Johansen co-integration test was conducted. The presence of long run equilibrium found led to the use of Error Correction Mechanism (ECM). The entire regression plane is statistically significant. This means that the joint influence of the explanatory variables [government recurrent expenditure (GRE), Government capital expenditure (GCE) and Government expenditure on health (GEH)] on the dependent variable (GDP) is statistically significant. The study therefore recommends among others that; Government should at all level of as a matter of urgency sustain the macroeconomic stability of the country through their expenditure patterns; spending in rational manner, Government should through its expenditure, regulate the flow of investible funds and boost employment by increasing its expenditure on the creation of skills acquisition centre and investing in industry that can employ the roaming youth in the country; this is aimed at increasing the masses purchasing power.

TABLE OF CONTENTS

TITLE PAGE   i

APPROVAL   ii

DEDICATION   iii

ACKNOWLEDGEMENT   iv

ABSTRACT   v

TABLE OF CONTENTS  vi

CHAPTER ONE   1

INTRODUCTION   1

1.1       Background of the Study  1

1.2       Statement of the Problem   3

1.3       Research Question  4

1.4       Objectives of the Study  4

1.5       To Statement of Hypotheses  4

1.6       Significance of the Study  5

1.7       Scope and Limitations of the Study  5

CHAPTER TWO   6

LITERATURE REVIEW    6

2.1       Theoretical literature  6

2.1.1    Wagner Law of Increasing State Activities  6

2.1.2    Peacock and Wiseman Hypothesis  8

2.1.3    Keynes view of Government Expenditure  10

2.2       Empirical Literature  17

CHAPTER THREE   25

RESEARCH METHODOLOGY   25

3.1          Research Design   25

3.2       Model Specification   25

3.4          Method of Evaluation   26

3.5          Sources of Data  29

CHAPTER FOUR   30

PRESENTATION AND ANALYSIS OF RESULTS  30

4.1       Unit Root Test 30

4.2       Test for Cointegration  31

4.3       Vector Error Correction Model 32

4.4       Test of Hypothesis  34

4.5       Implication of the Result 35

CHAPTER FIVE   37

SUMMARY, CONCLUSION AND RECOMMENDATION   37

5.1       Summary of the Findings  37

5.2       Conclusion  38

5.3       Policy Recommendation  38

REFERENCES  40

APPENDIX I  43

APPENDIX II  44