Investigating the Relationship between Expenditure and Economic Growth in Nigeria: A Two stage Robust Autoregressive Distributed Lag Approach to Cointegration

Adewale F. Lukman; Folorunso A. Serifat; Abiola T. Owolabi

Volume : IV, Issue : I, January - 2015

Investigating the Relationship between Expenditure and Economic Growth in Nigeria: A Two stage Robust Autoregressive Distributed Lag Approach to Cointegration

Adewale F. Lukman, Folorunso A. Serifat, Abiola T. Owolabi

Abstract :

This study examined the relationship between government expenditure and economic growth in Nigeria using annual data from 1970–2011 collected from the Statistical Bulletin of the Central Bank of Nigeria. The analysis is based on autoregressive distributed lag cointegration (ARDL) bound test approach by Peseran and Shin (2001). ARDL bound test revealed that the variables are cointegrated. The long run estimates revealed that recurrent and capital expenditure have a positive effect on GDP and are significant. The error correction mechanism has a negative sign and is significant.