Government expenditure and economic growth in Nigeria: a disaggregated approach.

Abstract

The paper represents part of a larger research agenda to assess how fiscal policy influences economic growth in Nigeria. This paper attempts to assess the impact of government expenditure on economic growth in Nigeria by adopting a disaggregated approach to the study. The essence of the study is to determine the components of government expenditure that enhances growth, identify those that do not, and recommend that they should be cut or reduced to a bare minimum. The paper is broadly consistent with literature and it opens new grounds by focusing on the long-run impact of fiscal policy. The analytical framework is based on econometric methodology encompassing, test for stationarity, test for cointegration and the specification of an error correction model. The study found no significant relationship between most of the components of government expenditure and economic growth. The estimation results were mixed, in particular some of the variables were weakly significant. However, it provided important clues to the future direction of research.