ABSTRACT

The study investigated the effect of government expenditure on standard of living in Nigeria for the period 1981-2018 with the following objectives namely,· to determine the effect of government expenditure on social and community services on standard of living in Nigeria, to determine the effect of government expenditure on administration on standard of living in Nigeria, to determine the effect of government expenditure on economic services on standard of living in Nigeria, to determine the effect of government capital expenditure on standard of living in Nigeria and to determine and find out the degree of exogenous and endogenous shocks from government spending indicators on standard of living in Nigeria. The specified model was estimated using the Vector Error Correction Model to determine the level of impact that one variable has on the other. While E-views 10 statistical software was employed in computing the result, time series data were obtained from World Bank national accounts data and OECD National Accounts data files and the study established that the short run coefficients of Government Expenditure on Social & Community Services (GEXPSC) had a negative relationship with GDPPCI and statistically insignificant at 5% level of significance while the variance decomposition test indicated that LGDPPCI, GEXPES and GEXPAD exhibited strong endogenous influence on GEXPSC as we move on into the future, Government Expenditure On Economic Services (GEXPES) had a positive relationship with GDPPCI and statistically insignificant at 5% level of significance while the variance decomposition test indicated that GEXPSC endogenously influences GEXPES in the long run, Government Expenditure on Administration (GEXPAD) had a negative relationship with GDPPCI and statistically significant at 5% level of significance while the variance decomposition test indicated that GEXPES exhibits strong endogenous influence on GEXPAD as we move on into the future while Capital Expenditure (CAPEXP) had a positive relationship with GDPPCI, increasing GDPPCI and statistically insignificantly at 5% level of significance, while the variance decomposition test indicated that CAPEXP endogenously influences itself in the long run. Based on the findings, the study recommended that the government should increase her spending on the health sector as this will reduce the level of poverty through an increase in per capita income which is a product of healthy labour force and should also increase and properly monitor her spending on the education sector.