Public Expenditure And Economic Growth In Nigeria

Journal Title: Asian Economic and Financial Review - Year 2011, Vol 1, Issue 3

Abstract

The debate on the use of fiscal policy for economic stabilization andinducement of economic growth is an old one. Key issue in this debate relatesto the efficacy of public expenditure on stimulating economic growth. Theneo-classical school held on extreme position by refuting the usage of fiscalpolicy to regulate the economy even in the time of economic crisis. At theother extreme are those who emphasize the efficiency of fiscal policy instabilizing economic fluctuations and stimulating growth. There is nearly aconsensus on the short-run effects of fiscal policy on the economy. Fiscalpolicy can temporarily raise or lower national income or counteractmacroeconomic disturbances that would otherwise influence national output.This paper contributes to this debate by investigating the effect of federalgovernment expenditure on economic growth in Nigeria.An augmented Solow model is specified in Cobb-Douglas form with publiccapital as one of the factors. Public expenditure is used as proxy for publiccapital which is further decomposed by sectors. This helps us to investigatethe impact of each sector on economic growth. The decomposition is in threeexpenditure streams: (i) expenditure on building human capital- publicexpenditure on education and health; (ii) expenditure on buildinginfrastructure- public expenditure on transport and communication, and othersocial services; and (iii) expenditure on administration which is necessary forthe functioning of government;A multivariate time series framework is used. Augmented Dickey- Fuller testindicated that two of the variables are stationary at first difference while othervariables are stationary at levels. While Phillips Peron tests show that threeare stationary at levels and others at first difference. Results of the regressionsshow that in the short run public spending has no impact on growth.However, Cointegration and VEC results show that there is long runrelationship between public expenditure and growth.

Authors and Affiliations

Usman A| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:[email protected], Mobolaji. H. I| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:[email protected], Kilishi A. A| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:[email protected], Yaru M. A| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:[email protected], Yakubu| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:[email protected], T. A. | Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:[email protected]

Keywords

Related Articles

EFFECTS OF SMS ON WRITING SKILLS OF THE UNIVERSITY STUDENTS IN PAKISTAN (A CASE STUDY OF UNIVERSITY OF GUJRAT)

The current study is intended to discover the effect of the SMS using habits on writing skills of the university students of Pakistan and to show how this novel medium of communication is affecting the writing skills of...

NATURAL RESOURCES, CONFLICT AND GROWTH NEXUS

Using panel data and GMM estimators we find that conflict and less developed countries (LDCs) natural resources have a positive and significant impact on GDP in the developed countries (DCs), while the lagged value of th...

DOES HIGHER EDUCATION REDUCE POVERTY AMONG YOUTHS IN NIGERIA?

Poverty is a serious problem in Nigeria with estimated 70.2 percent of Nigerians on less than 1$ daily. Poverty in Nigeria resembles a paradox, with her wealth; she still faces an enormous challenge in her effort to redu...

EMERGING STOCK PREMIA: SOME EVIDENCE FROM INDUSTRIAL STOCK MARKET DATA

This paper studies the behavior of emerging stock excess returns in an industry-by-industry context. We examine stock market performance for 23 countries and ten industries over 17 years from 1995 to 2012 – a period that...

THE COMPOSITION AND REGULATION OF THE FINANCIAL SERVICES SECTOR IN ZIMBABWE

Zimbabwe’s financial services sector continues to be found falling short in terms of observing corporate governance principles. The majority of the problems racking the sector are due to the existence of a number of regu...

Download PDF file
  • EP ID EP1719
  • DOI -
  • Views 663
  • Downloads 78

How To Cite

Usman A, Mobolaji. H. I, Kilishi A. A, Yaru M. A, Yakubu, T. A. (2011). Public Expenditure And Economic Growth In Nigeria. Asian Economic and Financial Review, 1(3), 104-113. https://europub.co.uk/articles/-A-1719