ABSTRACT

The general purpose of this study is to examine the effect of government expenditure on economic growth in Nigeria. Based on the analysis and the empirical results of the study between Gross Domestic Product (GDP) and government capital expenditure  it is revealed that the estimated coefficient of the regression parameter have a positive sign and thus conform to our a-priori expectation. The implication of the sign is that the dependent variable Gross Domestic Product (GDP) is positively affected by government capital expenditure. The study revealed a very good relationship between the dependent variable Gross Domestic Product (GDP) and independent variable government capital expenditure. From the study, capital expenditure has a significant effect on gross domestic product. The regression results showed that the estimated coefficient of the regression parameter of 4.735 have a positive sign and thus conform to our a-priori expectation. The implication of the sign is that the dependent variable Gross Domestic Product (GDP) is positively affected by Recurrent Expenditure (GREXP). The coefficient of determination R-square of 0.845 implies that 84.5% of the sample variation in the dependent variable Gross Domestic Product (GDP) is explained or caused by the explanatory variable while 15.5% is unexplained. The study concludes Government should conduct a proper evaluation and assessment in order to spend on critical sectors that will catalyze economic activities to impact positively on the economy.