Macroeconomic Variables and the Dynamic Effect of Public Expenditure: Long-term Trend Analysis in Nigeria

The paper investigates the long-run relationship between government expenditures and a set of macroeconomic variables (GDP, consumer price index and unemployment) using annual data collected from CBN statistical bulletin for a period of 19891 to 2011. It particularly adopts Johansen multivariate co integration for its estimation procedure and discovers that there is long-run relationship between government expenditure and the specified macroeconomic variables. It also discovers that an increase in capital expenditure improves economic bliss, while recurrent expenditure is detrimental to growth. Finally, our findings show that most of the variables do not Granger cause each other, but however, recurrent expenditure Granger causes prices, in the same veil capital expenditure does granger cause unemployment