HOW DOES GOVERNMENT SPENDING SPUR PRIVATE CONSUMPTION, PRIVATE INVESTMENT AND FOREIGN CAPITAL INFLOWS FOR ECONOMIC GROWTH IN NIGERIA?

Authors

  • Member Ahemen Benue State University Makurdi
  • Samuel Ogo Ominyi Benue State University Makurdi
  • Emmanuel Aondongusha Asue Benue State University Makurdi
  • Cheryl Ehi Otache Benue State University Makurdi

Keywords:

Economic Growth, Foreign Capital Inflow, Government spending, Private Consumption, Private Investment

Abstract

This study examined the effectiveness of government spending on economic growth in Nigeria through three principal variables: private investment, foreign capital inflows and private consumption using quarterly data covering the period of Q1 2007 to Q2 2020. Data for the study were sourced from Central Bank of Nigeria (CBN) Statistical Bulletin. The study employed impulse response and variance decomposition, dynamic pass-through elasticity and granger causality test with Vector Error Correction Model. The results suggested that a shock in the government spending elicited wide fluctuating from gross domestic product (GDP). The pass-through computation suggested that the short-medium and long-term dynamic elasticity had a positive effect of private consumption expenditure on economic growth. Foreign capital inflows exerted negative elasticity in the entire time horizon while gross capital formation exhibited positive response throughout the chosen time horizon. Finally, the granger causality test suggested that there was causality between the series of government expenditure, gross capital formation and economic growth in Nigeria. The study recommended that when government expenditure is judiciously utilized, it has capacity to spring up other socio-economic activities from the private sector through private investment.

Author Biographies

Member Ahemen, Benue State University Makurdi

Department of Economics,
Benue State University, Makurdi

Samuel Ogo Ominyi, Benue State University Makurdi

Department of Economics,
Benue State University, Makurdi

Emmanuel Aondongusha Asue, Benue State University Makurdi

Department of Economics,
Benue State University, Makurdi

Cheryl Ehi Otache, Benue State University Makurdi

Postgraduate Student,
Department of Economics,
Benue State University, Makurdi

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Published

2023-07-21

How to Cite

Ahemen, M., Ominyi, S. O., Asue, E. A., & Otache, C. . E. (2023). HOW DOES GOVERNMENT SPENDING SPUR PRIVATE CONSUMPTION, PRIVATE INVESTMENT AND FOREIGN CAPITAL INFLOWS FOR ECONOMIC GROWTH IN NIGERIA?. FUW-International Journal of Management and Social Sciences, 8(2), 19. Retrieved from https://fuw-ijmss.com.ng/index.php/fijmss/article/view/41