Are public spending determinants significant in per capita budget spending decisions in Nigeria?

Abstract

AbstractThe motivation for this study had been to assess whether the established determinants of public spending decisions in Nigeria which are government revenue, the inflation rate, the exchange rate, the growth rate of real gross domestic product, and the international price of oil, do actually affect per capita budget spending as assumed by the fiscal authorities. However, evidence from the baseline symmetric and asymmetric auto‐regressive distributive lag regressions suggest otherwise. A further probe by adding population growth rate, and gross fixed capital formation to the baseline variables to have a robust regression, suggests that while gross fixed capital formation which measures for infrastructure development was insignificant, population growth rate was crucial for the instituted determinants to exert substantial effect on per capita spending. This outcome can be taken as evidence of why the budget on a yearly basis is being perceived by most citizens as an ineffective tool of fiscal policy. Since the fiscal authorities have continued to always assume that factors that play crucial role in formulating their spending decisions; are the same with those necessary in deciding the share of Nigerians in the budget; without due consideration for population growth. Hence, ridiculing whatever goal the budget is set out to achieve.