•Government Expenditure and National income: A Causality Test for Nigeria

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Abstract (2. Language): 
The objective of this study is to test for the direction of causality between Government expenditure and National Income in Nigeria using annual data for the period 1970-2005. The econometric methodology employed was the Cointegration and Granger Causality test. First, the stationarity properties of the data and the order of integration of the data were tested using both the Augmented Dickey-Fuller (ADF) test and the Phillip-Perron (PP) test. We found that the variables were non-stationary in levels, but stationary in first differences. We applied the Johansen multivariate approach to cointegration to test for the long-run relationship among the variables. Our result shows no long-run relationship between Government expenditure and National Income in Nigeria. The Granger Causality test reveals that causality runs from Government expenditure to National Income. This result shows that Government expenditure plays a significant role in promoting economic growth in Nigeria.

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