Tag Archives: Government spending

Is the Relationship between Government Spending and Private Consumption in Egypt Symmetric (Published)

The aim of this study is to explore the relationship between the government spending and private consumption spending, and to know whether the relationship between the two is symmetric or not, by using Egypt data during the period from 1970 to 2016. The study uses the Autoregressive Distributed Lag (ARDL) approach for exploring a cointegration relationship between the two variables and the Nonlinear Autoregressive Distributed Lag (NARDL) approach for testing the hypothesis of a symmetric relationship between the two variables. By applying the ARDL approach, the study concluded that the effect of government spending on the consumption spending is not significant in the long run. While, it concluded, by applying the NARDL approach, that the hypothesis of presence of a symmetric relationship is not accepted and that there is a crowding out relationship in the positive shocks of the government spending and the substitutability coefficient between the two types of spending is 0.8699.

Keywords: Egypt Economy, Government spending, Private Consumption, crowding out relationship, symmetric relationship.

Reassessing the Link between Government Spending on Education and National Development in Nigeria (Published)

The study examined the relationship between government spending on education and national development in Nigeria using secondary data from the period 2001 to 2017. The study adopted gross domestic product as proxy for national development and the dependent variable; while government spending on education (representing Federal Government annual budgetary provision for the education sector) and inflation were used as the explanatory variables. Time series data for the study period was collected from the Federal Ministry of Finance, Office of the Accountant-General of the Federation and Central Bank of Nigeria (CBN) Official Gazette. The study employed descriptive statistics and multiple regression analysis based on the E-view 10 software as techniques of data analysis. The results provided evidence that government spending of education had significant positive effect on national development (at 5% level), while inflation had an insignificant effect on national development (at 13%). Overall, the study concluded that government spending on education has statistically significant positive effect on national at 5% with a probability of F-statistics value of 0.000000.  This means that government spending on education will enhance the availability of high level manpower that will ultimately bring about improvements in productivity leading to increase in national development. Based the findings, the study recommend that government should increase annual budgetary allocation to education sector to 26% of total annual budget in line with the UNESCO requirements; that the responsible organs of government should set targets and goals aimed at minimizing as much as possible (if not completely eradicating) misappropriation of funds.

Keywords: Education, Government spending, Inflation, National Development, Output, Productivity

Is Wagner’s Law a Myth or a Reality? Empirical Evidence from Nigeria (Published)

This study attempted to examine the long-run relationship and direction of causality between economic growth and government spending with consideration for exchange rate, consumer prices and monetary policy rate. This is with a view to determine the validity of Wagner’s law in Nigeria during the period 1961 to 2011. Times series data on variables such as real GDP, government expenditure, exchange rate, inflation rate and monetary policy rate during the period (1961-2011) were used. These data were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin 2011 Edition; World Development Indicator (WDI) Latest version and Federal Ministry of Finance. The study identified the order of integration of the variables used in the study using Phillips-Perron unit root test. The test was conducted with a drift and Time trend. The study also employed Johansen multivariate cointegration tests to determine if a group of I(1) variables converge to a long-run equilibrium. Vector Error Correction Mechanism was employed to model causal relation between economic growth and government spending. The results showed that variables are individually integrated of order one that is, a I(1) process. Johansen multivariate cointegration test showed that variables are cointegrated. Both the Trace test and Maximum-Eigen test suggest one cointegrating vector. The result of VECM estimates provided evidence in support of long-run causality running from real GDP to government spending. However, while evidence exists for long-run causality running from real GDP to government spending such evidence does not exist for short-run causality in this same direction. This indicates that Wagner’s Law is supported only in the long-run. The study therefore concludes that Wagner’s law is never a Myth but a Reality in Nigeria over the sample period.

 

Keywords: Cointegration, Government spending, Long-run causality, Short-run causality., economic growth