Investigating the Nexus of Macroeconomic Policy and its Outcome in Nigeria: Public Spending Versus Citizen's Welfare.

Nwaogwugwu, I.C ; Odeyemi, G.A (2017)

Staff Publications


The fundamental essence of governance is to cause an improvement on the welfare level of the citizenry. Hence, concerns on how much resource the government of a nation spends in achieving this objective may be reflected ill terms of how 'much financial resources these government activities leave in the hand of the citizenry '. These financial resources in the hands of the citizenry to a great extent determine their welfare especially with respect to consumption of private goods. This study therefore, aims at investigating the relationship between macroeconomic policy of the government of Nigeria (as reflected in public expenditure per capita and the outcome of such policy initiatives (as reflected in national income per capita. This also reflects welfare of the citizenry). Annual data over the period 1980 to 2012 were used used for the computation. The result of Johansen cointegration revealed that there is a long run relationship among the stationary (F' difference) variables which existed. Further, a unidirectional causality was observed, that is, from national income per capita to Government expenditure growth per capita. Thus, Wagner's law is supported by the data, ill the short run. The results are also suggestive of the fact that per capita government spending is predicated on the welfare level of the citizenry and not the other way round.