The relationship between public expenditures, inflation, and economic growth in Nigeria

Thesis title: The relationship between public expenditures, inflation, and economic growth in Nigeria
Author: Paul, Kehinde Samuel
Thesis type: Diploma thesis
Supervisor: Brůna, Karel
Opponents: Šíma, Ondřej
Thesis language: English
Abstract:
Public expenditure and inflation are two viable macroeconomic variables at the disposal of policymakers to drive the economy. However, the manner in which these tools are employed can either engender or impede the growth of the economy. Thus, the study investigated the contributions of public expenditure and inflation to the economic growth of Nigeria between 1980 and 2022. The study used GDP as the measure of economic growth and disaggregated public expenditure into government capital expenditure (LGCE) and recurrent expenditure (LGRE). The dynamic ARDL model estimator was utilized to analyze the dataset after checking cointegration using the bound test. The bound revealed that cointegration exists between economic growth, public expenditure, and inflation in Nigeria. The findings from the DARDL regression showed that government capital expenditure has a negative and significant impact on the economic growth of Nigeria in the short and long run, but government recurrent expenditure has a positive and significant impact on the economic growth of Nigeria, both in the short run and the long run. Inflation exacted a negative and significant impact on economic growth in Nigeria, both in the short run and the long run, while the exchange rate remained volatile, thereby impeding the growth of the economy in the short run and long run, but the money supply enhanced economic growth in Nigeria, as indicated by the short- and long-term results. The study therefore recommends, among other things, that price control mechanisms be put in place to encourage domestic production and reduce imports.
Keywords: Recurrent Expenditure; Capital Expenditure; Inflation; Economic growth; Public Expenditure; Nigeria; Autoregressive Distributed Lag (ARDL)
Thesis title: The relationship between public expenditures, inflation, and economic growth in Nigeria
Author: Paul, Kehinde Samuel
Thesis type: Diplomová práce
Supervisor: Brůna, Karel
Opponents: Šíma, Ondřej
Thesis language: English
Abstract:
Public expenditure and inflation are two viable macroeconomic variables at the disposal of policymakers to drive the economy. However, the manner in which these tools are employed can either engender or impede the growth of the economy. Thus, the study investigated the contributions of public expenditure and inflation to the economic growth of Nigeria between 1980 and 2022. The study used GDP as the measure of economic growth and disaggregated public expenditure into government capital expenditure (LGCE) and recurrent expenditure (LGRE). The dynamic ARDL model estimator was utilized to analyze the dataset after checking cointegration using the bound test. The bound revealed that cointegration exists between economic growth, public expenditure, and inflation in Nigeria. The findings from the DARDL regression showed that government capital expenditure has a negative and significant impact on the economic growth of Nigeria in the short and long run, but government recurrent expenditure has a positive and significant impact on the economic growth of Nigeria, both in the short run and the long run. Inflation exacted a negative and significant impact on economic growth in Nigeria, both in the short run and the long run, while the exchange rate remained volatile, thereby impeding the growth of the economy in the short run and long run, but the money supply enhanced economic growth in Nigeria, as indicated by the short- and long-term results. The study therefore recommends, among other things, that price control mechanisms be put in place to encourage domestic production and reduce imports.
Keywords: Recurrent Expenditure; Capital Expenditure; Inflation; Public Expenditure; Economic growth; Nigeria; Autoregressive Distributed Lag (ARDL)

Information about study

Study programme: Finance and Accounting
Type of study programme: Magisterský studijní program
Assigned degree: Ing.
Institutions assigning academic degree: Vysoká škola ekonomická v Praze
Faculty: Faculty of Finance and Accounting
Department: Department of Monetary Theory and Policy

Information on submission and defense

Date of assignment: 3. 6. 2023
Date of submission: 15. 4. 2024
Date of defense: 12. 6. 2024
Identifier in the InSIS system: https://insis.vse.cz/zp/84687/podrobnosti

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