On the Directional Causality Between Government Spending and Economic Growth in Nigeria Using Wagnerian or Keynesian Models.
This paper examines the causality between government spending and economic growth along with external reserve in a VAR technique by applying Granger causality/Block Exogeneity approach to Nigerian data for the period 196 1-2011. Various diagnostic tests for adequacy of the model were performed. This study finds that there is unidirectional causality from government spending to economic growth in Nigeria. This supports the conventional Keynesian framework that causality runs from government spending to economic growth and not from economic growth to government expenditure as posited by the Wagnerian.