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:abdullateefusman@gmail.com, Mobolaji. H. I| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:abdullateefusman@gmail.com, Kilishi A. A| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:abdullateefusman@gmail.com, Yaru M. A| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:abdullateefusman@gmail.com, Yakubu| Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:abdullateefusman@gmail.com, T. A. | Department of Economics, University of Ilorin, Ilorin, Nigeria. E-mail:abdullateefusman@gmail.com
Keywords
Related Articles
- EP ID EP1719
- DOI -
- Views 975
- Downloads 78
ASSESSMENT OF BUDGET SUSTAINABILITY IN SARAWAK
This study reexamines the sustainability of budget stance of Sarawak state, 1970-2008. Using the intertemporal borrowing constraint as a framework, the study tests the long-run relationship between government revenue and...
EVALUATION IN DYNAMIC PROCESS SPILLOVER EFFECT: ELEVEN MAJOR EXCHANGE RATE MARKETS
This paper analyzes the dynamic process of the spillover effects among major eleven exchange rate markets. The period spanning from 2000 to 2014 includes several financial crises and Chinese monetary reforms. By the vect...
ECONOMIC AND SOCIAL DUALITY IN IRAN (USING FUZZY TOPSIS DECISION-MAKING)
One of the planners and policy-makers? aims on the one hand is optimum allocating and distributing of credits and facilities among regions and on the other hand is providing and compiling a suitable model aiming at achie...
A NEW ECONOMIC DIMENSION TO THE ENVIRONMENTAL KUZNETS CURVE: ESTIMATION OF ENVIRONMENTAL EFFICIENCY IN CASE OF PAKISTAN
This study attempts to examine the linkage between environmental degradation and economic growth in Pakistan over the period 1972-2011. The main concern of this study is to test the validity of Environmental Kuznets Curv...
FACTORS INFLUENCING THE BANK PROFITABILITY – EMPIRICAL EVIDENCE FROM ALBANIA
Commercial banks have a crucial role for the allocation of economic resource in countries. Their main contribution is in the economic growth of the country through making available the funds for investors to borrow as we...