Impact of government expenditure on economic

To find out if the Nigerian government recurrent revenue enhances the growth of the economy. The theory that, although unanticipated price level changes may create macroeconomic instability in the short-run, the economy is stable at the full employment level of domestic output in the long-run because of price and wages flexibility.

It is against this backdrop, the study is undertaken to empirically evaluate the impact of government expenditure on economic growth in Nigeria.

The use of taxation and government spending to influence the economy. The mismatch between the performance of the Nigerian economy and massive increase in government total expenditure over the years raises a critical question on its role in promoting economic growth and development.

Multiplier effect Fiscal Multiplier is often seen as a way that spending can boost growth in the economy. The black line is not GDP growth, but is instead the sum of the various components of government spending.

The study classified government expenditure into administration, education, transport and communication. Total output divided by the quantity of labour employed to produce the output. In a recession, consumers may reduce spending leading to an increase in private sector saving.

First, I want to point out something quite amusing. If you are not familiar with the terms, fiscal deficit, government spending, economic growth, there is an opportunity to learn these terms in NSE Academy Certified Macroeconomics Course.

Public spending is also unproductive when government expenditures do not reach designated spending objectives. In a nutshell, government expenditure could adversely affect economic growth, if its allocation and utilization are not properly addressed.

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Moreover, there is uncertainty in the economy and people are also unwilling to invest. To ascertain the relationship between government real total capital expenditure and the economic growth in Nigeria.

For example, the firm Macroeconomic Advisers, using a Keynesian modelpredicted that the spending cuts would knock 1. Specifically, the rectangles indicate how the change in each component — positive or negative — relates to the change in overall GDP.

Does Government Spending Boost the Economy?

The level of increase in external loans further accelerated the debt over-hand situation and other problems. Means GDP at current basic prices less indirect taxes net of subsidies.

Background of the study Government Expenditure no doubt is an important instrument for a government to control the economy of a nation. Now we see the problem. Empirically, while a positive and significant relationship between government spending and economic growth have been established, there are much significant negative or no relationship between an increase in government expenditure and economic growth, following these mixed findings, the research question below are being raised.

We dodged a bullet, since the sequester dragged down growth so much. Edwards seems to think that the above chart shows at least a correlation between government spending and economic growth.

Impact Of Government Expenditure On Economic Growth In Nigeria ( 1970-2010)

However, the expenses on capital project like roads, airports, education, telecommunication, electricity, generator, etc are generally referred to as capital expenditure Muritala, To find out if there is a significant relationship between government recurrent expenditure and Nigerian economic growth.

Does Government Spending Boost the Economy? The relationship between variables which change in the same direction.between government expenditure and economic growth for a group of 30 OECD countries during the period [22] used the heterogeneous panel to investigate the impact of government expenditure on economic growth.

The authors employed the GMM technique, and discovered that countries with large government expenditure tend to. Aug 28,  · IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA. Government Expenditure no doubt is an important instrument for a government to control the economy of a nation.

Economists have been well aware of the effects in promoting economic growth. Research has shown that as the economy develops, the expenditure of government tends to increase with increase in economic activities.

IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA CHAPTER ONE

Growth may vary from one country to another. There are three major contributory factors towards the growth in government expenditure. 1. Aug 30,  · The productive government expenditure relates to government expenditures on human capital development and government investment.

Secondly, the study is based on long period of analysis fromwhich is a sufficient time frame for the analysis of the problem of the study.

Abu and Abdullah () investigates the relationship between government expenditure and economic growth in Nigeria from the period ranging from to They used disaggregated analysis in an attempt to unravel the impact of government expenditure on economic growth.

The effects of economic growth on government expenditure have been examined by many empirical studies using various testing procedures and different measures of government spending (e.g., Peacock & .

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Impact of government expenditure on economic
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