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Federal Government’s Recurrent Expenditures and Real Gross Domestic Product: A Disaggregated Approach

VC Ogueze, ACA, PhD, Dr Odimgbe Jude Chijekwu PhD, Sampson Ikenna Ogoke, Nwoko Cyprian Nnamdi Justin

Abstract

This study examined the effect of federal government disaggregated recurrent expenditure on economic growth. Data were sourced from Central Bank of Nigeria Statistical Bulletin.1986-2019. Real gross domestic product was modeled as the function of Federal Government Recurrent on Agriculture, Federal Government Recurrent on Works, Housing and Road Construction, Federal Government Recurrent on Transport and Communication, Federal Government Recurrent Expenditures on Education, Federal Government Recurrent Expenditures on Health and Federal Government Recurrent Expenditures on Defense. The study adopted the ADF Unit Root test, ARDL Bounds Cointegration Test and Autoregressive Distributed Lags (ARDL) was applied for the coefficient estimations. The study found that 99.8% variation in real gross domestic product was traced to recurrent expenditures as modeled. WHR, TRC, HLT have positive impacts while AGR, EDU, and DFE showed negative impacts on RGDP. From the finding, we conclude that recurrent expenditures determine the variation in real gross domestic product in Nigeria. We recommend that Government should sustain spending on WHR, TRC and HLT which have positively contributed to real output. It should commit more funds to AGR, EDU and DFE in order to reverse the adverse impact observed in these sectors. Government should sustain Recurrent funding on EDU and HLT which revealed a positive impact but boost revenue expenditure on AGR, WHR, TRC and DFE which constitute growth-constraints to the economy.

Keywords

Federal GovernmentRecurrent ExpendituresReal Gross Domestic ProductDisaggregated Approach

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