Tag Archives: Government Expenditure

Government Expenditure and Economic Growth in Nigeria: Aggregate Level Analysis using the Bound Test Approach (Published)

Economists have divergent views on the relationship between public expenditure and economic growth. The pro-market viewpoint argues that large government expenditure is a source of economic instability and has negative effect on economic growth. The anti-market view, on the other hand, stresses positive effect of government spending on economic growth. Stimulated by unresolved debates on the precise relationship between government spending and economic growth, and continuous growth in government spending, this study employed modified and extended aggregate production model to examine the effects of government expenditure at its’ aggregate level on economic growth in Nigeria for the period (1981-2018) using bound test (ARDL) approach. The co-integration result indicates the existence of long-run relationship between total government expenditure (LTGE) and economic growth in Nigeria. ARDL results show that total government expenditure (LTGE) impacted positively on economic growth in Nigeria in line with Keynesian theory. The granger causality test result indicates the existence of uni-directional causal relationship from LGDP to LTGE for the observed period, in line with Wagner’s theory. It is recommended that there should be proper utilization of public fund in the provision of security and critical infrastructure especially electricity supply and road infrastructure which are precursors to effective economic performance. Public fund should be properly managed to ensure accountability, transparency and fiscal responsibility in carrying out public assignment. It is believed that if corruption is tackled in the country, more public fund will be freed for development and public expenditure would impact more on the economic performance, hence, the fight against corruption in the country should be frontally confronted. Public institutions charged with the responsibility of handling corruption matters in the country should be overhauled and strengthen to ensure timely and proper handling of corruption matters.

Citation: Udo N. Ekpo , Ekere J. Daniel and Inibeghe M. Okon (2022) Government Expenditure and Economic Growth in Nigeria: Aggregate Level Analysis using the Bound Test Approach, International Journal of Developing and Emerging Economies, Vol.10, No.1, pp.1-20


Keywords: Bound Test Approach, Government Expenditure, Keynesian economic theory, Peacock and Wiseman Displacement theory, Wagner’s theory, economic growth

Tertiary School Enrolment in Nigeria: Implication for National Development (Published)

The paper evaluates tertiary school enrolment in Nigeria: Implication for national development. The main aim of the paper is to assess the effect of tertiary school enrolment on economic growth in Nigeria.  It is equally discovered that while tertiary enrolment is nominally increasing, in real terms, it is abysmally nose-diving. The analyses used for the study include the Ordinary Least Square estimation techniques, unit root test, co-integration test and the variance decomposition test to analyze the empirical model of the study. The findings of the empirical investigation confirm that tertiary enrolment is veritable tools through which appreciable economic growth can be enhanced in Nigeria. The study equally observed that tertiary school enrolment and government recurrent expenditures are statistically significant in explaining growth in the Nigerian economy. The paper therefore recommends among others that government should as a matter of urgency give immediate employment to all NCE graduate, this will encourage and increase the number of people seeking enrolment in the colleges

Keywords: Government Expenditure, National Development, capital expenditures, economic growth, recurrent expenditures, tertiary enrolment

Higher Institutions Funding and the Nigerian Economy (Published)

This study examines funding tertiary institutions and Nigerian growth perspective. The specific objective of the study is to evaluate the effect of tertiary institutions funding on national development in Nigeria. An ordinary least squares estimation technique was used in the study to evaluate the effect of the independent variables on the dependent variable. The result of experiment indicates that funding is a veritable tool for tertiary institutions growth in Nigeria. The result also shows that government capital expenditure funding is not statistically significant in the growth process. It was recommends that the government has to invest more on the education sector as well as ensuring that the resources are properly managed and used for the development of education services. The study concludes that funding of higher education in Nigeria needs to be improved upon especially in the area of capital expenditures funding. This is as a result of the increasing need and demand for specialized services in different sectors within the academic institutions.

Keywords: Budget, Education, Funding, Government Expenditure, Higher Institutions, economic growth

The Relationship between Government Expenditure, Economic Growth and Poverty Reduction in Nigeria (Published)

This study examines the relationship between government expenditure, economic growth and poverty reduction in Nigeria using time series data over the period 1980-2013. Employing modern time series econometric techniques such as unit root tests, bound test co-integration approach and error correction techniques within an ARDL framework which yields more robust estimates.It is found that government spending affect  economic growth positively and significantly by increasing real  private investment and fixed capital accumulation  which increase capital accumulation,  reduction  in current  account  deficit,  external  debt  burden  and  improve  education/skills of  the households by improving human capital. Findings emerge from this study that government expenditure has significant short run impact on poverty reductions in its lag form in which it might be examined by the role of fiscal policy in alleviating poverty of current year in Nigeria.The study suggested policies the role of government should be extended to ensure the magnitude and the quality of private investment as high as possible.

Keywords: ARDL Analysis, Government Expenditure, Poverty Reduction, economic growth

Government Expenditure and Economic Growth in Tanzania: A Time Series Analysis (Published)

This study empirically examines the long-run and short-run relationship between government expenditure and Economic growth in Tanzania over the period of 1996-2014 making the use of annual secondary time series data. The Error Correcting Model (ECM) is employed to examine the long-run and short-run estimates of parameters. In addition to that the granger causality test is employed to determine whether government expenditures granger causes economic growth. In the long-run government expenditure is found to be statistically significant and has positive relationship with economic growth. The short -run estimates show there is no significant relationship between government expenditures and economic growth.  The results of granger causality test show uni-directional causality running from economic growth to government expenditures. The government of Tanzania should improve in the allocation of resources in its development expenditure and social services expenditure and channel such expenditure to allow for private sector participation and infrastructure development in order to accelerate economic growth.

Keywords: Government Expenditure, Tanzania, Time Series Analysis, economic growth

Government Expenditure in Agriculture Sector of Nepal: An Empirical Analysis (Published)

This study examines the logical relationship between Agriculture Production and Government Expenditure in Nepal. The empirical research has  applied Cochrane-Orcutt  auto-regressive model from  panel data for the period 1983/84 to 2013/14. In this regard,  The empirical evidence confirm that the expenditure in agriculture sector is the causes of economic growth in Nepal. More specifically, iteration five gives the D-W value is 1.697 to compared tabulated  dL , dU values are 1.284 and 1.567 at the two independent variables. The D -W value lies between dU and 4-dU, where this is nearest to 2.Sothat, there is no auto-correlation among error terms.  Fact finding to shows that, the checking results homogeneous with theory and healthy and strong of the conclusion.

Keywords: Agriculture Production, Cochrane-Orcutt, Empirical Research, Government Expenditure

Effects of Tax Policy on the Expenditure of Local Government Councils in Imo State (Published)

The objective of the study is to evaluate the effect of the Nigerian tax policy on the ability of local governments to raise and spend money in discharge of their statutory responsibilities. The investigation was prompted by the fact that local governments seem to be carried away by the euphoria of the periodical statutory allocations from the Federation Account to the extent that they are blinded towards the potential of fiscal operations that would make them less dependent on the statutory allocations. The study therefore re-awakens the senses of local government administrators to the need to exploit more efficiently the opportunities that come with the recent national tax policy. The study is anchored on the Decentralization Theory as postulated by Richard Musgrave (1959) cited in Arowolo (2011). The study adopted a descriptive approach. The secondary data were analysed by means of Ordinary Least Square regression and by employing the Chow Test of structural stability it was established that the tax policy which came into operation in January 2010 has a significant impact on the fiscal operation of local governments in Imo State. Furthermore, the study found that the tax policy had a significant positive effect on the expenditure of local governments, for instance, for Owerri-Municipal Local Government, a unit increase in tax revenue brought about one million naira increase in total expenditure of the local government. It was also found that the tax policy improved the ability of local governments to raise revenue through various forms of taxes. Hence local governments would fare better when they fully avail themselves to the opportunities within the tax policy which make fiscal operations easier and more efficient. The implication of the result is that if local governments do not become enthusiastic in exploiting the benefits of the tax policy, they will remain inefficient in the discharge of their statutory functions. The study therefore recommends among others, that local government authorities should be more proactive in the business of fiscal operation by setting targets on the level of tax revenue to be realized within a particular period and reviewing same periodically.

Keywords: Chow Test., Federation Account, Government Expenditure, Local Government, Tax Policy

Does Economic Growth Influence Government Expenditure? Evidence from Nigeria (Published)

The main focus of this study is to investigate the impact of economic growth on government expenditure in Nigeria covering the periods 1970 to 2013. Gross Domestic Product (GDP) was used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately employed in this study. The findings of this study revealed that economic growth has significant impact on government expenditure in Nigeria. The study further provided evidence of bi-causality between expansion in economic growth (GDP_P) and government expenditure in Nigeria. The study recommended among others that proactive steps must be taken by governments to stimulate economic growth through production.

Keywords: Aggregate demand and Granger Causality, Asymmetric ARDL, Government Expenditure, economic growth

Impact of Fiscal Policy on the Manufacturing Sector Output in Nigeria: An Error Correction Analysis (Published)

There has been a growing concern on the role of fiscal policy on the output and input of manufacturing industry in Nigeria, despite the fact that the government had embarked on several policies aimed at improving the growth of Nigerian economy through the contribution of manufacturing industry to the economy and capacity utilization of the sector. The aim of this study is to examine the impact of fiscal policy on the manufacturing sector output in Nigeria. Empirical evidence from the developed and developing economies has shown that fiscal and monetary policies have the capacity to influence the entire economy if it is well managed. An ex-post facto design (quantitative research design) was used to carry out this study. The results of the study indicate that government expenditure significantly affect manufacturing sector output based on the magnitude and the level of significance of the coefficient and p-value and there is a long-run relationship between fiscal policy and manufacturing sector output. The implication of this finding is that if government did not increase public expenditure and its implementation, Nigerian manufacturing sector output will not generate a corresponding increase in the growth of Nigerian economy. It is the recommendation of researcher that the expansionary fiscal policies should be encouraged as they play vital role for the growth of the manufacturing sector output in Nigeria; that fiscal policy should be given more priority attention towards the manufacturing sector by increasing the level of budget implementation, which will enhance aggregate spending in the economy; and consistent government implementation will contribute to the increase performance of manufacturing sector.

Keywords: Capacity Utilization, Co-integration, Error Correction Model, Government Expenditure, Government Tax Revenue, Manufacturing sector, Output