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Does The Relationship Between Government Expenditure And Economic Growth Follow Wagner’s Law In Nigeria?

Author

Listed:
  • Clement A.U. Ighodaro

    (University of Lagos, Akoka, Nigeria)

  • Dickson E. Oriakhi

    (University of Benin, Nigeria)

Abstract
While previous studies to test Wagner’s hypothesis for Nigeria used total government expenditure, this paper in addition to total government expenditure used a disaggregated government expenditure data from 1961 - 2007, specifically; expenditure on general administration and that of community and social services to determine the specific government expenditure that economic growth may have significant impact on. Economic conditions and policies change implying that it is not only economic growth that can affect government expenditure hence the inclusion of other fiscal policy variable and political freedom to augment the functional form of Wagner’s law. All the variables used were found to be I(1) and long run relationship exist between the dependent and the independent variables except in the case where only GDP was used as the independent variable. Wagner’s hypothesis does not hold in all the estimations rather Keynesian hypothesis was validated in all the estimation. Elasticity estimates and Granger causality results are in agreement.

Suggested Citation

  • Clement A.U. Ighodaro & Dickson E. Oriakhi, 2010. "Does The Relationship Between Government Expenditure And Economic Growth Follow Wagner’s Law In Nigeria?," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 10(2), pages 185-198.
    • Handle: RePEc:pet:annals:v:10:y:2010:i:2:p:185-198
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    More about this item

    Keywords

    Wagner law; Keynesian Hypothesis; Granger Causality and Cointegration;
    All these keywords.

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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