Dynamic Effect Of Government Spending On Agricultural Output In Nigeria

Abstract

The paper examined the dynamic effect of government spending on agricultural output in Nigeria. We established the relationship between government capital and recurrent spending on agriculture and agricultural output in Nigeria in a multiple regression model. The model for the regression analysis has government capital and recurrent expenditure on agriculture, as the explanatory variables whileagricultural output is the dependent variable. Using secondary data from CBN statistical bulletin and applying the econometrics method of co-integration/ error correction mechanism and granger causality testmethods. We discovered that dynamic model depicted by the parsimonious ECM result shows that thecoefficient of government capital and recurrent spending on agriculture were positively related to agricultural output. Also, the coefficient of the ECM shows that there exists a long-run equilibrium relationship among the variables. This is because the coefficient of ECM is negatively signed and significant. Moreover, the Pairwise Granger Causality results show that government capital and recurrentspending on agriculture granger cause agricultural output in Nigeria. Based on these findings, we recommend amongst others that: Since government spending is positively and significantly related toagricultural output, government should increase more of her budgetary allocation to the agricultural sectorin order to boost production output.