Government Expenditure and Selected Macroeconomic Variables in Nigeria: A Bayesian VAR Approach | As

On a daily basis, the size of the public sector grows, and one wonders if this expansion is accompanied by an increase in production growth. In the literature on government expenditure, there are two strong but contradictory perspectives: on the one hand, government expenditure is a key policy tool for ensuring that economic activity is carried out at a suitable level and that cyclical short-term changes in aggregate expenditure are accurate; on the other hand, excessive government participation in economic activities disrupts and distorts other economic activities. This study employed Bayesian Vector Autoregressive to look at the influence of government spending on macroeconomic indicators in Nigeria from 1986 to 2020. The shock from recurrent expenditure, according to empirical findings, has a government capital spending has a little impact on economic growth and has no long-term effect, but it has a significant impact on economic growth and has a long-term effect. As a result, it was recommended that the government begin to exercise some control over capital investment in order to avoid exacerbating economic conditions.

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