Causal Relationship Between Public Debts And Public Expenditure In Nigeria
This study empirically examines the causal relationship between Public Expenditure and National Debt in Nigeria.
Reviews were conducted extensively on various literatures and existing works regarding the effect of federal government
expenditure and total external debt outstanding on the productivity and economic growth in the country. Consequently,
model was specified following Solow’s growth model inspiration regarding granger causality test, with data on each
variables ranging from 1981 to 2012. Augurmented dickey fuller was used for stationarity test. Public expenditure is
financed majorly by domestic debt, while external debt is not significant in the development of infrastructural facilities.
Consequently, based on the results obtained and interpreted, the null hypothesis (H0) is rejected. Thus, from the foregoing,
we conclude that ‘public expenditure granger cause domestic debt and Nigeria as a nation borrowed to finance their recurrent
expenditure, though with high level of corruption and misappropriation of public funds and poor administration has impeded
the growth of the sector but with inadequate investment on infrastructural facilities that can boost the revenue generated in
order to balanced or surplus budget in the economy. In order to achieve meaningful development, the government
expenditure must be wisely spent in other to make the country more productive. Most especially expenditure on
infrastructural facilities should be increased in other to attract foreign investors and not to waste the money on heavy debt