The Impact of Government Expenditure on Economic Growth and Inflation Rate in Nigeria

The research’s objective is to investigate the influence of government recurrent expenditure and government capital expenditure on economic growth; the impact of government recurrent expenditure and government capital expenditure on the inflation rate; how well the government expenditures work hand-in-hand with the money supply in influencing economic growth and inflations rate; and the long-run relationship between inflation rate and economic growth. All in the case study of Nigeria, from 1981 to 2022. With the use of the ARDL Bound Test approach, there exists a long-run relationship between the variables. The estimated ARDL long-run coefficients showed that government recurrent expenditure and money supply have a positive relationship with economic growth and inflation rate; government capital expenditure has a negative relationship with economic growth and inflation rate; and a negative relationship between inflation rate and economic growth. According to the Granger Causality Test results, there is a unidirectional causality from government expenditures to economic growth and money supply. However, no directional causality between government expenditures and inflation rate; inflation rate and economic growth; and money supply and inflation rate.