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Abstract: This paper
discusses the long-run and short-run nexus among government capital expenditure
and economic growth in Nigeria based on the aggregated annual time series data
(2000-2024) using the Autoregressive Distributed Lag (ARDL) bounds testing
procedure. Government capital spending is dissected into three general
components: Infrastructure Capital Spending (ICE), Education Capital Spending
(ECE), and Health Capital Spending (HCE). Real Gross Domestic Product (RGDP) is
used as the dependent variable. Time series data are used. The ARDL bounds test
establishes the presence of a long-run cointegrating relationship between the
variables, with infrastructure capital spending having the highest positive
impact on economic growth (0.35 elasticity), followed by education (0.21) and
health (0.19) capital spending. The error correction mechanism indicates that
about 62% of short-run disequilibrium is corrected every year, thereby
reflecting good adjustment towards long-run equilibrium. All the test of
diagnosis confirms econometric stability of the model and stability tests
confirm consistency of the parameters over the sample period. Estimates are in
strong empirical support of Keynesian theoretical model with the implication
that government capital expenditures is determined to be an economic growth
engine through its multiplier effects and by raising productivity and policy
implications are in support of targeted infrastructure investment in a balanced
sectoral strategy. The discovery shows that investment in infrastructure should
be given top priority because of its highest elasticity to growth, adopting an
even-handed approach of investment in all three areas to restore
complementarities, and with long-term commitment by the policy to accomplish
lasting advantages of growth. DOI: https://doi.org/10.51505/IJEBMR.2026.10927 |
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