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VOL. 4, ISSUE 2 (2022)
Inflation and public expenditure in Nigeria (2008-2019): An empirical analysis
Authors
Oru Anthony Odu, Ubana Ubi Iwara
Abstract
This study on inflation and public expenditure investigated inflation rate on public spending in Nigeria. The main objective of the study is to assess the impact of inflation on public sector expenditure. The study employed the Expo Facto research design and data for the study are collected from the three (3) tiers of government in Nigeria as contained in the central bank statistical bulletin and the consumer price index (CPI). The study adopted both descriptive and inferential statistics with the Standard Ordinary Least Squares (OLS), analysis of variance (ANOVA) and correlation coefficients. The result shows that there exist a significant and positive relationship between inflation rate and public spending in Nigeria. This infers that the growth in inflation has a negative impact on public expenditure as a rise in the rate of inflation leads to an increase in government’s spending and thus government will only provide public goods and services at a higher cost as such government should always strife to control inflation. The study concludes that the anti-inflationary mechanism of government for contraction of money supply through the manipulation of its expenditure is not in adherence as government virtually increases expenditure as inflation rate increases instead of abandoning some projects and programmes except for productive projects and programmes. The study recommends that restrictive fiscal policy mechanism and restrictive monetary policy rate should be implemented as tools to militate against the growth of inflation rate and money supply in the economy. Credit regulatory procedures should be implemented and maintained in order to control high rate of inflation in the country as both monetary and fiscal policies are complimentary tools for the war against the surge in inflation and the attainment of neutrality of money as a key macroeconomic objective. Incentives for savings and investments should be encouraged during inflation as measures to control inflation, promote economic and price stabilization.
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Pages:89-98
How to cite this article:
Oru Anthony Odu, Ubana Ubi Iwara "Inflation and public expenditure in Nigeria (2008-2019): An empirical analysis". International Journal of Finance and Commerce, Vol 4, Issue 2, 2022, Pages 89-98
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