Public Investment and Output Performance: Evidence from Nigeria

Taofik Ibrahim

Zagreb International Review of Economics and Business, 2016, vol. 19, issue 1, 1-24

Abstract: This study examined the direct/indirect long-run relationships and dynamic interactions between public investment (PI) and output performance in Nigeria using annual data spanning 1970-2010. A macro-econometric model derived from Keynes’ income-expenditure framework was employed. The model was disaggregated into demand and supply sides to trace the direct and indirect effects of PI on aggregate output. The direct supply side effect was assessed using the magnitude of PI multiplier coeficient, while the indirect effect of PI on the demand side was evaluated with marginal propensity to consume, accelerator coeficient and import multiplier. The results showed relatively less strong direct effect of PI on aggregate output, while the indirect effects were stronger with the import multiplier being the most pronounced. This is attributed to declining capital expenditure, poor implementation and low quality of PI projects due to widespread corruption. By and large, we concluded that PI exerted considerable infuence on aggregate output. JEL Classification: H5; H50; H54

Keywords: Public Investment; Output performance; income-expenditure framework; Macro-econometric simulation; Nigeria (search for similar items in EconPapers)
Date: 2016
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