Government Expenditure and Economic Growth: Evidence from Nigeria
T. A. Odetayo & A. Z. Adeyemi
Department of Accountancy
Osun State Polytechnic, Iree, Nigeria
E-mail: deentao@yahoo.com
Corresponding Author: T. A. Odetayo
ABSTRACT
The study examined impact of government expenditure on economic growth with the aid of secondary data obtained from Central Bank of Nigeria for the period of 1978 to 2015. Augmented Dickey Fuller and Philips-Perron Statistic tests were used to check stationarity of the variables employed. Johansen co-integration technique was employed to test long run relationship of the variables. Error Correction Model (ECM) was used to examine the effect of government expenditure on economic growth. The study revealed that there is a long run relationship between government expenditure and economic growth. Furthermore, total recurrent expenditure, total expenditure on defence and total expenditure on agriculture have significant positive impact on economic growth. On contrary, total capital expenditure, total expenditure on health and total expenditure on education have negative impact on economic growth. Based on these findings, the study recommended that government should increase its revenue through diversification of nation’s economy in order to have adequate funds to spend on social infrastructure, which would spur economic growth. In addition, government needs to raise expenditure on major core sectors like health and education to enhance the economic growth activities in Nigeria.
Keywords: Government Expenditure; Economic Growth; Recurrent Expenditure; Capital Expenditure; Nigeria.
