Economic Growth, Government Recurrent and Capital Expenditures in Nigeria: An Examination of the Linkage Effects

This study examines the long and the short run linkage effects of government recurrent and capital expenditure on economic growth in Nigeria using annual data covering the period of 1985 to 2022. This study employs Autoregressive Distributed Lag (ARDL) model to examine the long run relationship existing among the variables. The ARDL long-run bounds test established the existence of long run effects of government recurrent and capital expenditure on economic growth in Nigeria. Specifically, the ARDL long run model test reveals that while government capital expenditure has a negative and statistically significant relationship with economic growth in Nigeria, government recurrent expenditure has a positive and significant relationship with economic growth in Nigeria. The ARDL Short-run bounds test reveals that it will take the speed of about one year and six months for a disequilibrium in the short-run to be corrected in the long-run. The study recommends the strategic channeling of government capital expenditures to the productive sector and for the provision of critical infrastructure that will boost growth. It also recommends the prudent management of recurrent expenditures for the optimal use of public funds.