EFFECT OF PUBLIC EXPENDITURE ON THE ECONOMIC GROWTH OF NIGERIA

This study empirically investigates the effect of government expenditure on economic growth in Nigeria using annual time series data spanning from 1986 to 2023. The analysis employs secondary data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and the National Bureau of Statistics (NBS), focusing on key macroeconomic variables including Gross Domestic Product (GDP), Government Capital Expenditure, Government Recurrent Expenditure, and Inflation Rate. The data were subjected to preliminary tests for stationarity and cointegration. Findings reveal that the variables are integrated of mixed orders—zero and one—but exhibit no cointegrating relationship, indicating the absence of a long-run equilibrium among them. Consequently, an Autoregressive Distributed Lag (ARDL) model was utilized to assess short-run dynamics. The results show that neither capital nor recurrent government expenditures have statistically significant short-run impacts on economic growth. However, inflation and lagged GDP exert significant influence on short-term output fluctuations. These findings suggest that public spending in Nigeria during the study period may have been inefficiently allocated, limiting its effectiveness in stimulating growth. In contrast, inflation poses a significant constraint on economic performance, corroborating theoretical expectations.