Government Expenditure and Economic Growth in Nigeria, 1981-2013: A Bound Testing Approach

Aiyedogbon J.O. (), B.O. Ohwofasa and Anyanwu S.
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Aiyedogbon J.O.: Department of Economics Bingham University, New Karo-Nasarawa State
B.O. Ohwofasa: School of General Studies Delta State Polytechnic P.M.B. 03, Otefe-Oghara Delta State Nigeria
Anyanwu S.: Department of Economic University of Abuja Nigeria

International Journal of Economics and Financial Research, 2015, vol. 1, issue 4, 50-56

Abstract: The paper examines the impact of public sectoral expenditure on economic growth in Nigeria for the period 1981-2013. It was observed that the growth of government expenditure has not fully felt by the economy. The econometric methodology employed is the ARDL model and results show that while the impact of government expenditure on administration and debt servicing were positive on economic growth in the long and short run, expenditure on economic and social sectors has negative impact. We argue that this may not be unconnected with the high level of corruption prevalent in the public sector where funds that are meant for provision or maintenance of social-economic activities like agriculture, roads, transportations, schools and hospitals are diverted for personal use. The CUSUM and CUSUMSQ test show the model is stable as neither of them cross the 5% boundary. The paper recommended that government should increase expenditure to the social and economic sectors while debts or debt servicing should be reduced. Also, corruption so prevalent in the public sector must be minimized if cannot be eradicated.

Keywords: Government expenditure; Economic growth; Unit root test; Co-integration; ARDL model. (search for similar items in EconPapers)
Date: 2015
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