THE GRANGER CAUSALITY TESTS ON THE IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA
LAWAL, A.S
Department of Mathematics and Statistics, The Federal Polytechnic, Bauchi, Nigeria
RAPHEAL NENLAT
Department of Mathematics and Statistics, The Federal Polytechnic, Bauchi, Nigeria
JACOB, H.U
Department of Mathematics and Statistics, The Federal Polytechnic, Bauchi, Nigeria
Receiving Date:
2015-09-08
Acceptance Date:
2015-10-05
Publication Date:
2015-11-11
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Abstract
In the last decade, Nigeria economy has metamorphosed from the level of millions of naira to
billions of naira and postulating into trillions of naira on the expenditure side of the budget This study is
to examine the impact of government expenditure on economic growth in Nigeria. Using annual data of
total government expenditure and gross domestic product from 1977 to 2012. The econometrics employed
was the unit root, co-integration and the granger causality test. Firstly from the Augmented Dickey Fuller
(ADF) test, Agriculture Expenditure, Defence expenditure, Education Expenditure, Health Expenditure
and Transport and Communication expenditure are non-stationary at zero level, and later became
stationary at first difference. Secondly the co-integration test shows that there is no co-integration (or
long run) relationship between government expenditure and economic growth. Thirdly in the Granger
causality test it was found that the total government expenditure on Agriculture has a significant effect on
gross domestic product (GDP), it also found that the total government expenditure on Defence (security),
Transport and communication has a positive impact on economic growth in Nigeria.
Keywords:
Government Expenditure, Economic Growth, Recurrent Expenditure, Capital Expenditure, Co-integration
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