Contraction in Economic Activities and Government Expenditure in Nigeria: An Asymmetric ARDL Approach

The main focus of this study is to investigate the impact of contraction in economic growth on government expenditure in Nigeria covering the periods 1970 to 2013. Gross Domestic Product (GDP) was used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately employed in this study. The findings of this study revealed that contraction in economic growth has significant impact on government expenditure in Nigeria. The study further provided evidence of short-run causality from depression in economic growth to government expenditure in Nigeria but could not support any evidence of long-run causality.