IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 10 NO. 11 2024
DOI: 10.56201/ijebm.v10.no11.2024.pg30.40

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Assessment of the Impact of Government Expenditures on Economic Growth in Nigeria: The ARDL Dynamic

SULEIMAN Ali Gombe, Dr. M. Umar, Dr. M.Y Kabara & GAMBO Yusuf (Ph.D)

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Abstract

This study examines the impact of government expenditure and inflation on economic growth in Nigeria from 1980 to 2023. Using an Autoregressive Distributed Lag (ARDL) model, the research investigates the short-run and long-run relationships between these economic variables. The study utilizes annual time series data on Gross Domestic Product (GDP), total government expenditure, government recurrent expenditure, government capital expenditure, and inflation rates. The findings reveal a positive and statistically significant relationship between government expenditure and economic growth in both the short and long run. Where in the long run, a 1% increase in total government expenditure is associated with a 0.16% increase in GDP, while in the short run, a 1% increase in government expenditure growth leads to a 0.39% increase in GDP growth. The study recommends Nigeria's Federal Government should prioritize capital expenditure, strengthen inflation-targeting policies, adopt an integrated economic management approach, and develop inflation-adjusted budgeting mechanisms.

keywords:

Inflation, Government expenditure, Economic Growth, Gross Domestic

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