Empirical Analysis of the Nexus between Budget Implementation and Economic Development in Nigeria

Olaoye, Oladipupo

Empirical Analysis of the Nexus between Budget Implementation and Economic Development in Nigeria

Festus Oladipupo Olaoye §

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§ Ekiti State University.

Empirical Analysis of the Nexus between Budget Implementation and Economic Development in Nigeria

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Abstract

The study evaluated the effect of budget implementation on Nigeria’s economic growth. Gross Domestic Product (GDP) was used as the explained variable while Public Recurrent Expenditure (PRE), Public Capital expenditure, (PCE) and Public Debt Service (PDS) were used as the explanatory variables of the study. Data on these variables were sourced from the Central Bank of Nigeria statistical bulletin from 1986 to 2014. The study adopted Ordinary Least Square (OLS), Co-integration and Error Correction Model (ECM) in analyzing respectively the short and long-run effect of budget implementation on Nigeria’s economic growth. The findings from the study revealed that in the short run, PRE will have a positive relationship with GDP while PCE and PDS will have a negative relationship with GDP. In the long run, there was a complete turn of relationship as to what was obtained in the short run. In both the long run and short run, only PRE is statistically significant at 5% level of significance. The F-test revealed that the overall model is statistically significant in the explanation of the subject matter. The Durbin Watson graph shows that there is absence of serial correlation in the model adopted for the study. Judging by the fact that the only statistically significant explanatory variable in the study is PRE, it was therefore used as a basis for the conclusion as well as recommendation in the study. Thus, it is generally concluded that as the Nigerian government keeps implementing recurrent expenditure, its positive effect on the economy can only be felt for a short period of time afterwards, a negative effect will emerge. The study recommended that the Nigerian government should concentrate more on the implementation of other items in the budget other than the public recurrent expenditure as a strategy for achieving a long term economic development.

References

23 Cites in Article

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Festus Oladipupo Olaoye. 2016. "Empirical Analysis of the Nexus between Budget Implementation and Economic Development in Nigeria". Global Journal of Management and Business Research - D: Accounting & Auditing GJMBR-D Volume 16 (GJMBR Volume 16 Issue 27 (D2)).

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GJMBR Volume 16 Issue 27 (D2)

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

budget capital expenditure debt service Economic Growth recurrent expenditure

Classification

GJMBR-D Classification JEL Code: O10

Submission ReceivedDecember 11, 2015
Peer Review Double Blind
Handling Editor
Accepted January 5, 2016
Published August 15, 2016

Version of record

v1.2

Issue date

August 15, 2016

Language

English

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Article Matrices

Total Score: 102

Country: Nigeria

Subject: Global Journal of Management and Business Research - D: Accounting & Auditing

Authors: Olaoye, Festus Oladipupo (PhD/Dr. count: 0)

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Publish Date: 2016 08, Wed

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