Proceedings of the 20th International Academic Conference, Madrid

DOES PUBLIC SPENDING GROWTH STIMULATE ECONOMIC DEVELOPMENT? EMPIRICAL EVIDENCE FROM NIGERIA

DICKSON ORIAKHI, VINCENT AJAYI-OJO

Abstract:

The main objective of this paper is to ascertain empirically the impact of government expenditure on economic development in Nigeria. The time series data for this study spans from 1981 through 2013. The study adopts the Cointegration analysis. The Error Correction model shows that the various functional government expenditures were statistically significant and have positive relationship with gross domestic product. However, government expenditures on education and health have no significant impact on economic development in the short term. The coefficient of the Error correction model showed that the deviation of gross domestic product from its long-run equilibrium value will be reconciled quickly. On the whole, our study reveals that public spending enhances economic development in the long term and that a long run relationship exists between government expenditure and economic development in Nigeria.

Keywords: Public Spending, Gross Domestic Product, Cointegration, Error Correction Model and Nigeria.

DOI: 10.20472/IAC.2015.020.071

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