Government Expenditures and Macroeconomic Indicators in Nigeria

Abstract

This study examined the impact of government expenditure on selected macroeconomic variables from 1983 to 2017. Secondary data sourced from Central Bank of Nigeria Statistical Bulletin of various issues was used. The researcher used Gross Domestic Products and Unemployment Rate as the proxy of the dependent variables while government expenditures on education; health; and agriculture constituted the proxies for the independent variable. The analytical technique used was regression analysis of the ordinary least square (OLS) based on the Auto Regressive Distributed Lag used to analyze the data. The result revealed that government expenditure in the agricultural sector has negative and insignificant relationship with gross domestic product while government expenditure in the educational and health sectors have positive and significant relationship with Gross Domestic Products. Government expenditure in agriculture has a negative relationship with Unemployment Rate while government expenditure in education and health sectors has positive and significant relationship with Unemployment Rate. Based on our findings therefore, the paper recommended that governments direct financial expenditures on agriculture should be reduced gradually until it is eliminated; the government should sustain her expenditures in the other sectors but must work on the root causes of what happens in the educational system of the country.

Keywords: Government Expenditures, Macroeconomic Variables, Gross Domestic Products, Unemployment Rate, Agricultural Sector, Educational Sector, Health Sector.

DOI: 10.7176/JESD/10-14-06

Publication date:July 31^st 2020