ABSTRACT

The study investigated Inflation Rate and Government Spending in Nigeria. The objectives of this study include to determine the effect ofinflation on government spending in Nigeria and to determine ifthere is a sustainable long run relationship between inflation and government spending in Nigeria. The study employed multiple regression techniques using Ordinary Least Square (OLS) regression method to determine the relationship between the dependent and independent variable. The period covered was thirty-six years rangingfrom 1980-2018 and the data used was gotten from secondary sources particularlyfrom Central Bank ofNigeria (CBN) Statistical Bulletins, National Bureau of Statistic (NBS) and relevant Journals. The research was based on the determinant ofinflation with the use offiscal policy as a measure for the control ofinflation rates. The study revealed that inflation and exchange rate have positive relationship with government expenditure in Nigeria, while interestrate has a negative relationship with government expenditure in Nigeria. The work concludes that inflation has a positive impact on government expenditure in Nigeria thus, indicating that the rate ofinflation has a major impact on government expenditure in Nigeria. This implies that changes in the general price level has no effect on government expenditure whatsoever in the long run. Therefore, this study recommends the government should carry out inflation targetingpolicies thatseeks to keep inflation at a certain level that is necessary to spur economic growth while keeping government expenditure at a minimum. Also, there is urgent need to instill fiscal discipline in government expenditure by initiating far reaching effective internal control measures andmoreproactive economic management coordination and implementation as well as discouraging all non-productive activities and expenditures in all tiers ofgovernment