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GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH IN NIGERIA: COINTEGRATION ANALYSIS AND CAUSALITY TESTING  [PDF]
Inuwa Nasiru
Academic Research International , 2012,
Abstract: This study investigates the relationship between government expenditure (disaggregated into capital and recurrent) and economic growth in Nigeria over the period(1961-2010). It employs the Bounds Test approach to co-integration based on unrestricted Error Correction Model and Pair wise Granger Causality tests. The results fromthe Bounds Test indicate that there exists nolong-run relationship between government expenditure and economic growth in Nigeria only when real GDP is taken as dependent variable. In addition, the causality results reveals that government capital expenditure granger causes economic growth. While no causal relationship was observed between government recurrent expenditure and economic growth. Therefore, the policy implication of this findings is that any reduction in capital expenditure would have a negative repercussions on economic growth in Nigeria.
Public Capital Accumulation and Economic Development in Nigeria; 1970-2010  [PDF]
Michael Baghebo,Samuel Edoumiekumo
International Journal of Academic Research in Business and Social Sciences , 2012,
Abstract: This study empirically examine the relationship between Public Capital Accumulation and Economic Development in Nigeria from 1970-2010. Public capital accumulation was disaggregated into Federal Government capital expenditure on Administration, Economic sector, Social and Community services and Transfers. The stationarity and non stationarity of the data series were examined using group unit root test. The variables PCGDP, ECONS, ADM, SOC, and TRANSF attained stationarity after first differences. The Johansen cointegration test of trace and maximum Eigen value statistics was used to establish long run equilibrium relationship among the variables in the model. We also estimated the overparameterized and parsimonious ECM to account for short run dynamic adjustment required for stable long run equilibrium relationship among the variables in the model. The impact of ECON, ADM and SOC on economic development was positive and statistically insignificant while TRANSF was negative and statistically significant. The positive but insignificant impact of ADM, SOC, ECON is worrisome because these are the sectors that account for a huge amount of government capital expenditure. Transparency and accountability in the conduct of Government activities should be encouraged. Thus the entrenchment of the culture of transparency and accountability will help to conserve public resources for the many things the Government has to do for the society. Government should cut its spending particularly on projects and programs that generates least benefits or impose highest cost. The study showed that disaggregation of public capital accumulation truly revealed the impact of each component on economic development than aggregation.
Oil Price Volatility and its Consequences on the Growth of the Nigerian Economy: An Examination (1970-2010)  [cached]
Oriakhi D.E,Iyoha Daniel Osaze
Asian Economic and Financial Review , 2013,
Abstract: This study examines the consequences of oil price volatility on the growth of the Nigerian economy within the period 1970 to 2010. Using quaterly data and employing the VAR methodology, the study finds that of the six variables employed, oil price volatility impacted directly on real government expenditure, real exchange rate and real import, while impacting on real GDP, real money supply and inflation through other variables, notably real government expenditure. This implies that oil price changes determines government expenditure level, which in turn determines the growth of the Nigerian economy. This result seems to reflect the dominant role of government in Nigeria. Considering the destabilizing effects of oil price fluctuations on economic activity and government spending in Nigeria, the study makes some recommendations. Some of these include; fiscal prudence, reform in budgetary operations, export diversification, revival of the non-oil sector of the economy, accountability and corporate governance.
Testing the Relationship between Government Revenue and Expenditure: Evidence from Nigeria
Kanayo Ogujiuba,Terfa W. Abraham
International Journal of Economics and Finance , 2012, DOI: 10.5539/ijef.v4n11p172
Abstract: The paper examines the revenue-spending hypothesis for Nigeria using macro data from 1970 to 2011. Correlation analysis, granger causality test, regression analysis, lag regression model, vector error correction model and impulse response analysis were the techniques used for analysis. The paper found that revenue and expenditure are highly correlated and that causality runs from revenue to expenditure in Nigeria. The vector error correction model also confirms that there is a significant long run relationship between revenue and expenditure implying that disequilibrium in expenditure can be corrected in the long run through policies that adjust oil and non-oil sector revenues. The lagged regression model showed that the positive relationship between revenue and expenditure reverts to negative at lag five thereby justifying the need for the use of medium term expenditure framework to monitor expenditure patterns in the short to medium term. The paper concludes that short term shocks from crude oil price passes through oil revenue to affect expenditure. This has led to swings in public expenditure pattern with sustained increase of recurrent expenditure over capital that has consequences for economic growth. Putting policies in place to enhance the performance of the non-oil sector and adopting expenditure framework that accounts for possible decline in crude oil prices was conceived as useful in enhancing a healthy revenue-expenditure relationship in Nigeria.
IMPACT OF GOVERNMENT SECTORIAL EXPENDITURE ON THE ECONOMIC GROWTH OF NIGERIA  [PDF]
Ebiringa,Oforegbunam Thaddeus,Charles-Anyaogu Nneka B
International Journal of Economics and Research , 2012,
Abstract: Government expenditures remain the bedrock of Nigeria’s economic growth. Hence the need to criticallyevaluate the impact of expenditures’ some priority sectors on the economic growth. A Cochrane-Orcutt and ECM method was adopted to measure the long run effect of selected macroeconomic variables economic growth. The result shows that expenditure on telecommunication, Defence and security, Education and Health Sector have made positive impact on Nigeria’s economic growth. But transportation and agricultural expenditures have impacted negatively in the economic growth in Nigeria. The conclusion therefore is that the level of government expenditures for transportation and agricultural development is still not adequate to build the much need capacity in the sectors to impact positively to economic growth
Government Expenditure on Human Capital Development: Implications for Economic Growth in Nigeria  [cached]
Stephen O. Oluwatobi,Oluranti. I. Ogunrinola
Journal of Sustainable Development , 2011, DOI: 10.5539/jsd.v4n3p72
Abstract: This study examines the relationship between human capital development efforts of the Government and economic growth in Nigeria. It seeks to find out the impact of government recurrent and capital expenditures on education and health in Nigeria and their effect on economic growth. The data used for the study are from secondary sources while the augmented Solow model was also adopted. The dependent variable in the model is the level of real output while the explanatory variables are government capital and recurrent expenditures on education and health, gross fixed capital formation and the labour force. The result shows that there exists a positive relationship between government recurrent expenditure on human capital development and the level of real output, while capital expenditure is negatively related to the level of real output. The study recommends appropriate channeling of the nation’s capital expenditure on education and health to promote economic growth.
The Causality between Government Revenue and Government Expenditure in Iran  [PDF]
Yousef Elyasi,Mohammad Rahimi
International Journal of Economic Sciences and Applied Research , 2012,
Abstract: The causal relationship between government revenue and government expenditure is an important subject in public economics especially to the control of budget deficit. The purpose of this study is to investigate the relationship between government revenue and governmentexpenditure in Iran by applying the bounds testing approach to cointegration. The results of the causality test show that there is a bidirectional causal relationship between government expenditure and revenues in both long run and short run. Therefore, the results of this paper are consistent with fiscal synchronization hypothesis. The policy implication of results suggests that because of existing interdependence relation between government expenditure and revenue, the government makes its expenditures and revenues decision simultaneously. Under this hypothesis, the fiscal authorities of Iran should try to increase revenues and decrease expenditure simultaneously to control the budget deficits.
GOVERNMENT EXPENDITURE ON ENGINEERING CONSTRUCTION, COMMUNICATION AND TRANSPORTATION: EVALUATION OF IMPACT ON ECONOMIC GROWTH IN NIGERIA
DR. MRS. I. S. MADUEME,ALAMEZIEM KELECHI STANLEY
International Journal of Engineering Science and Technology , 2012,
Abstract: This work tries to assess the impact of government investment in engineering construction, communication technology and transportation on economic growth in Nigeria. One null hypothesis guided the study and data was collected from 1977 to 2008 from Central Bank of Nigeria statistical bulletin. Data were analysed using regression, F and t tests, stationary and co-integration tests. Results revealed that increases in government expenditure in engineering construction impacted more significantly on economic growth than their expenditureon transport and communication. Increased expenditure on all sectors was recommended especially on engineering construction. In addition policy modifications are needed to ensure that government expenditure on the transportation and communication sector achieve greater impacts on economic growth.
DOES THE RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE AND ECONOMIC GROWTH FOLLOW WAGNER’S LAW IN NIGERIA?  [PDF]
CLEMENT A.U. IGHODARO,DICKSON E. ORIAKHI
Annals of the University of Petrosani : Economics , 2010,
Abstract: While previous studies to test Wagner’s hypothesis for Nigeria usedtotal government expenditure, this paper in addition to total government expenditure used adisaggregated government expenditure data from 1961 - 2007, specifically; expenditure ongeneral administration and that of community and social services to determine the specificgovernment expenditure that economic growth may have significant impact on. Economicconditions and policies change implying that it is not only economic growth that can affectgovernment expenditure hence the inclusion of other fiscal policy variable and politicalfreedom to augment the functional form of Wagner’s law. All the variables used were found tobe I(1) and long run relationship exist between the dependent and the independent variablesexcept in the case where only GDP was used as the independent variable. Wagner’s hypothesisdoes not hold in all the estimations rather Keynesian hypothesis was validated in all theestimation. Elasticity estimates and Granger causality results are in agreement.
The Relationship between Economic Growth and Government Expenditure: Evidence from Sudan  [cached]
Mohame Abdel Rahman Salih
International Business Research , 2012, DOI: 10.5539/ibr.v5n8p40
Abstract: In the economic literature, there are two opposing views on the relationship between economic growth and the size of the government. The Wagner hypothesis states that as the economy grows so does the size of the public sector. This is in contrast to the Keynesian view that the growth of government expenditure results in the growth of GDP. The Wagner hypothesis was tested for different countries and the results were conflicting. The primary objective of this paper is test the Wagner hypothesis in the context of the Sudan for the period 1970-2010. The methodology used is cointegration, causality, and error correction model (ECM). The results for the Sudan indicate that the data for the period considered supports the Wagner’s hypothesis.
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