Impact of Government Expenditure on Economic Growth: Evidence from Nigeria

  • Bashir Bappahyaya School of Basic and Remedial Studies, Gombe State University, Gombe, Nigeria
  • Fada K. Abiah Department of Business Administration, Gombe State University, Gombe, Nigeria
  • Farida Bello Department of Economics, Gombe State University, Gombe, Nigeria
Keywords: ARDL, , Government expenditure, Nigeria, Economic Growth

Abstract

This study seeks to explain the impact of government expenditure on economic growth in Nigeria using time series data from 1970 – 2017. Secondary data were sourced from Central Bank of Nigeria and World Bank. The study applied a modified version of endogenous growth model using Autoregressive distributed lag model. The adopted model was fitted with six variables- capital stock, labour force, capital expenditure, recurrent expenditure, inflation and trade openness. The study employed ADF-unit root test, Phillips-Perron test and Pairwise Granger causality test. All the variables used were found to be integrated at first difference except labour and inflation and a stable long run equilibrium relationship exist between the dependent and independent variables. Empirical findings revealed that two variables: capital and recurrent are statistically significant and hence these are the significant variables in explaining the impact of government expenditure on economic growth. The Granger causality test demonstrates a unidirectional causality from government expenditure to economic growth, in validation of Keynesian theory. In line with above, the study recommends among others that: government should intensify effort to ensure resources are properly managed and invested in productive sectors so as to foster economic growth.

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Published
2020-03-31
How to Cite
Bappahyaya, B., Abiah, F. K., & Bello, F. (2020). Impact of Government Expenditure on Economic Growth: Evidence from Nigeria. European Scientific Journal, ESJ, 16(7), 69. https://doi.org/10.19044/esj.2020.v16n7p69