Nigeria is a developing economy with active participation of the federal government in various economic sectors not only to promote economic growth and development but also to instill fiscal and economic discipline in the economy. Government participation in the economy means greater funding of economic activities and this is expected to impact on economic indicators. This study analyses the effect of government expenditure on inflation rate in Nigeria within a period of 39 years spanning (1981-2019). The study specifically seek to ascertain, determine, explore and assess the extent to which government expenditures on key sectors of agriculture, education, health and telecommunications respectively affect inflation rate in Nigeria. In line with the specific objectives of this study, four research questions are raised and four hypotheses duly formulated. Data used for this study were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin. Government Expenditure on Agriculture (GOA), Government Expenditure on Education (GOE), Government Expenditure on Health (GOH) and Government Expenditure on Telecommunication (GOT) are the independent variables while inflation rate (INF) is the dependent variable. Descriptive statistics, diagnostic test employing the Augmented Dickey Fuller and a multivariate regression based on Johanson Cointegration and Error Correction Model (ECM) are used to analyze the data. Our findings indicate that government expenditures on education and agriculture have positive but insignificant effect on inflation rate and on the other hand, government expenditure on health and government expenditure on telecommunications have positive and significant effect on inflation rate. Based on our findings, the study recommends that government should increase its allocation to the health and education sectors to trigger increased skills and healthcare of economic operators for enhanced human capital development and economic productivity. Government should also provide adequate infrastructures to facilitate economic growth and reduce high inflation rate.
government expenditure, inflation, government expenditure on agriculture, government expenditure on education, government expenditure on health and government expenditure on telecommunications
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