Public Expenditure and Poverty Interdependence: Evidence from Nigeria

Abstract

Public expenditure viz-a-viz poverty interdependence has one core objective, that is, provision of finance to those fit poor or facing poverty challenges. Based on Nigeria statistical data covering public expenditure and poverty between 1981–2019. The study adopted the Engle-Granger single equation approach to co-integration, the residual unit root test and ARDL model to evaluate possible connections amid the variables using time series data from National Bureau of Statistics, Nigeria and Central Bank of Nigeria Statistical Bulletin. The findings show that public expenditure variable in the short and long run do not conform to a priori expectation. This implies that public expenditure can only affects per capita consumption in the short run but has a weak impact on the long run. The diagnostic statistics from the results reveals that the model has a high goodness of fit as indicated by the adjusted coefficient of determination which shows that about 86 per cent of the systematic variations in the dependent variable is explained by the variations in the regressors altogether. The F-statistic value of 18.1771 with p-value of 0.0000 passes the test of statistical significance at the 1 per cent level of significance, thus indicating that the explanatory variables are jointly significant in the determination of the dependent variable. The study recommends public expenditure on capital projects tailored towards infrastructural development should be encouraged and propagated. These findings shed light on the complex dynamics of public expenditure and poverty in Nigeria and highlight the need to include government recurrent expenditure, government capital expenditure, real gross domestic product and foreign direct investment. These findings can help policymakers, government, and stakeholders plan for sustainable public expenditure, economic durability, and financial stability. Public expenditure, real gross domestic product and poverty are empirically linked in this study, adding to current knowledge. This research aims to illuminate these relationships to inform governmental decisions, public expenditure, real gross domestic product and poverty management. This knowledge can assist build a lasting poverty management that boosts economic growth and stability.