THE NEXUS BETWEEN GOVERNMENT EXPENDITURE AND POVERTY REDUCTION IN NIGERIA

ABSTRACT

The question of wether government expenditure impacts on poverty or not has been an age-long one. Thus, this study  investigates whether government spending has an effect of poverty within the Nigerian context. The study covered the period 1980 - 2020. The techniques of estimation used include: the Augmented Dickey Fuller Unit Root Test, the Johansen co-integration Test, Error Correction Model, Parameter Stability Test and Breusch-Pagan-Godfrey Heteroscedasticity Test. Time series data from (1980-2020) on per capita income, Government expenditure, industrial output, money supply, inflation rate were used. The results showed that a negative and significant relationship exist between Government expenditure and per capita income as a measure of poverty in Nigeria and thus  government expenditure has not helped in reducing poverty rate in Nigeria. The study recommends that there is need to further increase government expenditure in order to stimulate aggregate demand which in turn would lead to a structural transformation of the economy thereby reducing poverty rates in Nigeria. The study also recommends the need to stimulate government and private expenditures in order to stimulate industry output which would in the long run reduce poverty in Nigeria.