Effect of Macroeconomic Indices on Government Spending Efficiency: 1999-2022 Aniebo, Anthony Ejike
Abstract
This study investigated the impact of key macroeconomic indices on government spending efficiency. The research examines four primary macroeconomic determinants: Real GDP (RGDP), inflation (INFL), exchange rate (EXCR), and oil revenue (OREV). The study adopted the ex post facto research design and data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin, spanning from 1999-2022. The unit root test used Augmented Dickey- Fuller (ADF) showing stationarity at 1(0) and 1(1). Using the OLS, the findings reveal that real GDP has a significant positive effect on total government expenditure, indicating that economic growth drives increased spending. In contrast, inflation and exchange rate fluctuations do not significantly affect government expenditure, suggesting that these factors may be mitigated by existing fiscal policies or structural adjustments. Oil revenue, despite its crucial role in Nigeria's fiscal policy, also shows no significant direct impact on government spending. Based on these findings, the study recommends leveraging economic growth to enhance public spending efficiency, implementing robust inflation control measures, adopting strategies to stabilize the exchange rate, and improving the management of oil revenues. These recommendations aim to ensure that government spending effectively supports national development goals and addresses persistent economic challenges. The study provides valuable insights for policymakers in Nigeria and other developing countries facing similar macroeconomic and fiscal challenges.
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