Government expenditure and economic development: empirical evidence from Nigeria

Taiwo Muritala and Abayomi Taiwo

MPRA Paper from University Library of Munich, Germany

Abstract: This study attempts to empirically examine the trends as well as effects of government spending on the growth rates of real GDP in Nigeria over the last decades (1970-2008) using econometrics model with Ordinary Least Square (OLS) technique. The paper test for presence of stationary between the variables using Durbin Watson unit root test. The result reveals absence of serial correlation and that all variables incorporated in the model were non-stationary at their levels. In an attempt to establish long-run relationship between public expenditure and economic growth, the result reveals that the variables are co integrated at 5% and 10% critical level. The findings show that there that there is a positive relationship between real GDP as against the recurrent and capital expenditure. It could therefore be recommended that government should promote efficiency in the allocation of development resources through emphasis on private sector participation and privatization\commercialization.

Keywords: Current expenditure; capital expenditure; macroeconomics; economic development (search for similar items in EconPapers)
JEL-codes: B22 E62 O16 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-afr, nep-mac and nep-pbe
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Citations: View citations in EconPapers (17)

Published in European Journal of Business and Management No 9.Vol 3(2011): pp. 18-28

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37293

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