PUBLIC EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA: VAR APPROACH

Abstract

The major objective of this study was to examine the impact of government expenditure on the growth of the Nigerian economy. This study specifically examined the impact of government capital, government recurrent expenditure and government fiscal deficit on the growth of the Nigerian economy. The ex-post facto design was adopted and secondary data were sourced from the CBN statistical bulletin and collected using desk survey for the period 1980 to 2017. The VAR technique was applied among other techniques to analyse the data. Findings showed that government capital expenditure had a positive but insignificant effect on the growth of the Nigerian economy. Also, it was revealed that government fiscal deficit had insignificant negative effect on the growth of the Nigerian economy. Lastly, the study revealed that at the short run, government recurrent expenditure had an insignificant positive effect on the growth of the Nigerian economy while in the long run it has a positive but insignificant effect on economic growth. Based on these findings, it was recommended that Government should revamp non-functioning capital projects to reduce the inefficiency in capital expenditure and monitor its contract awarding process closely, to prevent over estimation of execution cost and boost economic growth; government should enhance it recurrent expenditure to sustain the growth potentials of the economic through increasing it expenditure in running governmental activities and the planning and coordination of expenditure process of government should be made more efficient to avoid running into deficit and promote surplus funding of public expenditure. JEL: H10; H83; O11 Article visualizations: