ABSTRACT
This study examined the effect of government expenditure on economic growth in Nigeria from 1990 to 2022, using secondary data sourced from the Central Bank of Nigeria Statistical Bulletin (2022). Real Gross Domestic Product (RGDP) was used as a proxy for economic growth, while government expenditure was measured through Expenditure on Administration (ADM), Economic Services (ECONS), Social and Community Services (SOCS), and Transfers (TRANS), with Inflation Rate (INF) as a control variable. The Augmented Dickey-Fuller (ADF) test indicated a mixed order of integration, I (0) and I (1). Using the Autoregressive Distributed Lag (ARDL) model, a long-run relationship between government expenditure and economic growth was established. ADM and SOCS had significant positive effects on RGDP in both short and long run. ECONS showed a significant negative effect in both the short and long run, while TRANS had an insignificant negative effect. The Error Correction Model (ECM) indicated an annual adjustment speed of 8.61% toward long-run equilibrium. An adjusted R² of 99.78% confirmed the model's explanatory strength, while the F-statistic validated its overall significance. The study concluded that government expenditure significantly affects economic growth and recommended stricter monitoring such as enhanced EFCC and ICPC oversight to improve the impact of economic services expenditure.
This study examined the effect of government expenditure on economic growth in Nigeria from 1990 to 2022, using secondary data sourced from the Central Bank of Nigeria Statistical Bulletin (2022). Real Gross Domestic Product (RGDP) was used as a proxy for economic growth, while government expenditure was measured through Expenditure on Administration (ADM), Economic Services (ECONS), Social and Community Services (SOCS), and Transfers (TRANS), with Inflation Rate (INF) as a control variable. The Augmented Dickey-Fuller (ADF) test indicated a mixed order of integration, I (0) and I (1). Using the Autoregressive Distributed Lag (ARDL) model, a long-run relationship between government expenditure and economic growth was established. ADM and SOCS had significant positive effects on RGDP in both short and long run. ECONS showed a significant negative effect in both the short and long run, while TRANS had an insignificant negative effect. The Error Correction Model (ECM) indicated an annual adjustment speed of 8.61% toward long-run equilibrium. An adjusted R² of 99.78% confirmed the model's explanatory strength, while the F-statistic validated its overall significance. The study concluded that government expenditure significantly affects economic growth and recommended stricter monitoring such as enhanced EFCC and ICPC oversight to improve the impact of economic services expenditure.