ATTENTION:
BEFORE YOU READ THE
PROJECT WORK, PLEASE READ THE INFORMATION BELOW. THANK YOU!
TO GET THE FULL
PROJECT FOR THE TOPIC BELOW PLEASE CALL:
08068231953,
08168759420
TO GET MORE PROJECT
TOPICS IN YOUR DEPARTMENT, PLEASE VISIT:
GOVERNMENT EXPENDITURE AND INFLATION RATE IN
NIGERIA (1989-2009)
ABSTRACT
The objective
of government expenditure involves allocative, distributive, regulatory and
stabilization functions. It is also the visible express of activities to actualize
government decision on what goods and services to provide in the quantity and
quality that is needed. However, in as much cannot be importance of its tool of
intrasectoral allocative cannot be under-estimated, cautions measures must be
taken to ensure that its execution should not trigger off a situation where too
much money is pursing fever goods, thus resulting, hence general loss of
purchasing power of the currency, hence inflation. Consequently, this dreaded
and unlikable economic situation prompted this study “government expenditure
and inflation rate in Nigeria economy (1989-2009). It aims at establishing the
relationship between expenditure and the rate of inflation as well as examines
the extent to which government expenditure influence the rate of inflation. The
study is set against the background of the Nigerian economy which has been
characterized by unstable price level as its most profound problem, if not in
recent time. The secondary data used in the empirical analysis of evidence came
from journals published by the central bank of Nigeria. The data was analyzed
using statistical package for science and social science. The statistical tool
includes correlation, regression and the t-test statistics. In order to carry
out this research a number of questions were raised through which the
hypothesis were formulated and tested using the simple regression model. The
result from this test shows a negative relationship between inflation and
government expenditure for the period under review, which is not line with our
expectations. Based on this finding from the test, it reveals that the fiscal
policy measures adopted by the CBN did not directly or positively impacted on
the rate of inflation in Nigeria economy within the period under review.
TABLE OF CONTENTS
Title Page i
Approval ii
Dedication iii
Acknowledgment iv
Table of Contents v
CHAPTER
ONE: INTRODUCTION
1.1 Overview 1
1.2 Statement
of the problem 2
1.3 Objective
of the study 3
1.4 Hypothesis
formulation 5
1.5 Significance
of the study 6
1.6 Limitation
of the study 6
1.7 Organization
of the study 7
1.8 Definition
of concept 9
CHAPTER
TWO: LITERATURE REVIEW
2.1 Backgrounds 12
2.2 Government
expenditure 13
2.3 Type
of government expenditure 18
2.4 Sources
of government expenditure 19
2.5 Importance
of government expenditure 21
2.6 Inherent
constraints to government expenditure 22
2.7 Problems
of government expenditure 24
2.8 Government expenditure allocation given the
period of coverage in question 29
2.9 Inflation 32
2.10 Types of
inflation 34
2.11 General causes of inflation 34
2.12 Causes of
inflation in Nigeria 36
2.13 Effects of inflation 39
2.14 Measurement of inflation 41
2.15 Position effects of inflation 45
2.17 Government and the economic issues on
government of Nigeria and economy 46
2.18 Issues on Nigerian government expenditure and
inflation 50
CHAPTER THREE: METHODOLOGY
3.1 Introduction 61
3.2 Research
design 61
3.3 Sampling
procedure 62
3.4 Data
collection method 63
3.5 Data
analysis technique 64
3.6 Model
specification 65
3.7 Dependent
variable 65
3.8 Independent
variables 65
3.9 Model 67
3.10 The theoretical relationship
between inflation and government expenditure 68
CHAPTER
FOUR: PRESENTATION OF DATA ANALYSIS
4.0 Empirical
investigation 70
4.1 Introduction 70
4.2 Data
presentation and analysis 70
4.3 Analyses
of result 72
4.4 Empirical
result from simple regression 72
4.5 Hypothesis
Test 74
CHAPTER FIVE: DISCUSSION, CONCLUSION AND
RECOMMENDATION
5.1 Introduction 76
5.2 Discussion 76
5.3 Recommendations 77
5.4 Conclusion 79
Bibliography 80
Appendix 81
References 89
CHAPTER ONE
INTRODUCTION
1.1 OVERVIEW
In
modern economies, the traditional role of government expenditure is to shape
the course and determine the state of economic development.
Specifically,
government expenditure is primary tool of intersectional resource allocation
with its attendant involvement of public expenditure could be perceived to be
in connected with the activities of the public sector of the economy. Thus, the
general notion of government expenditure on productivity is predicated on the
interpretation of how public sectors employs human and other resource and
accumulated capital stock to produce public goods, such as judicial services,
national defence, protection of the poor, economic stabilization and private
goods.
Furthermore,
government expenditure plays an important role in the functioning of the
economy at all level of development, (Ekpo, 1994).
It
is also the visible expression of activities to actualize government decision
on what goods and services to produce in the quantity and quality that is
needed. Government expenditure can also be seen as the measure through which
allocative efficiency can be attained, it comes in the commanding height of the
economy and takes all major decision for all allocation of scarce economic
resources efficiently and effectively.
However,
inflation is generally referred to as a situation of rapid, persistent and
unacceptably high rise in the general purchasing power of the currency, Asioju
(1991). Generally, the importance of this research is to analyzed the influence
or impact of government expenditure on the rate of inflation, at presently, we
are assessing the rate of inflation depending on government expenditure
basically consist of two component, current expenditure which defines
expenditure incurred by the government for the production of goods and services
in a country within a fiscal year, then, recurrent expenditure, we mean all
running cost of the government for the maintenance of existing or new
institutions and services and capital expenditure, involve the cost of bring
into existence new institutions, service and projects.
Noting
that for the purpose of this work, we are aggregating all.
Analytically,
the level of expenditure made by the government determines the level of money
supplied in an economy. In turn, the money supplied in an economy determines
the level of purchasing power in the society.
However,
in a society if the purchasing power of the people increase more than the
available goods and services, then we experience a situation where too much
money will be chasing too fewer goods and services, hence inflation. This
implies that, government expenditure is responsible for the rate of inflation
in an economy if all things being equal. This occurs when the government
increases her expenditure (expansionary measure), thereby increase the quantity
of money in circulation. On the contrary when there is a contractionary measure
in place, it resulted to a decrease in government expenditure thereby reducing
the spending power of the people, hence deflation. Thus, from the fore going,
the study is meant to ascertain how and to what extent does the government
expenditure affect or influence the rate of inflation in an economic like
Nigeria.
1.2 STATEMENT OF THE PROBLEM
In
the post-independence and 1960’s witnessed relatively low government
expenditure compared to what it was in the 1970’s to the present period. During
the period, the inflationary trend was very minimal, CBN (2000).
Eventually,
the 1970’s witnessed the emergency of the oil sector, thus, resulting to
increase in government revenue. Therefore, it is expected that government
revenue should equal government expenditure (balanced budget) given the above
effect was increase in government expenditure unfortunately, this ugly trend
led to a situation where disposable income of individuals in the country
exploded, giving rise to a situation whereby too much money is pursuing too
fewer goods, thus, inflation. But, several efforts have been made to ensure
that this problem is addressed, or at least, to reduce it to a single digit,
have received slow response. As will be noted by the combined efforts of formal
minister of finance (Hon) Mrs. Okonjo Iwelaa and the immediate past central
bank of Nigeria Governor, Prof. Charles Chukwuma Soludo, the emphasis of their
combined polices to reduce the rate of inflation in Nigeria to a single digit,
given the increase in revenue to the government through oil sales.
Thus,
owing to this situation, it becomes imperative that a study of this kind be
carried out so as to actually ascertain the cause of this relationship between
rate of inflation and government expenditure. Hence, the study, the influence
or impact of government expenditure on the rate of inflation in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The
board objective of this study is to examine the impact or influence or
government expenditure on the rate of influence in Nigeria.
However,
the following specific objective shall guide the study;
1. To
ascertain whether government expenditure has any impact on the rate of
inflation in the Nigeria economy.
2. To examine
if there is a relationship between government expenditure and the rate of
inflation in the Nigeria economy.
3. To ascertain
the nature of relationship and the rate of inflation in the Nigeria economy.
1.4 HYPOTHESIS FORMULATION
The
following hypothesis will be formulated based on the above.
H01:
There is no significant relationship between government expenditure and the
rate of inflation in the Nigeria economy.
H02:
There is a significant relationship between government expenditure and the rate
of inflation in the Nigeria economy.
1.5 SIGNIFICANT OF THE STUDY
This
study is relevant in the following ways;
1. It
will widen the scope of the scholars towards a better understanding of the
nature of relationship that exist between government expenditure and inflation
rate in the Nigeria economy.
2. It will
aid policy makers towards the formulation of policies that will be useful for
the running of the economy and taking control of inflation in particular.
3. Lastly,
it will help to build data for intending researchers on a similar topic.
1.6 LIMITATION OF THE STUDY
There
are certain limitations which fall short of idea, which the research has
established or organized, Baridan (1990). Insufficient information on sensitive
economic and development issues. The availability of time was a constraint to
conduct an intensive research. Specifically, it is believed that these
limitations are not to serve in nature as to completely make avoid the
conclusion of the research.
1.7 ORGANIZATION OF THE STUDY
The
organization of the study will be structured in the following; chapter one will
provide an overview of the context in which the study is conducted, it is made
up of the following; a background to the study, hypothesis, formulation,
significance of the study, limitation of the study, the organization of the
study and definition of concepts.
Chapter
two contained with the literature review of the opinions of scholars as it
relates to the theme of the study. Chapter three will address the issue of
method of study, sampling procedure, data collection method, data analysis
technique model specification and the theoretical relationship between
inflation and government expenditure.
Chapter
four contained with the presentation of data analysis and its interpretation.
Lastly,
chapter five, bring the report of this study to a conclusion with a discussion,
recommendations and conclusion.
1.8 DEFINITION OF CONCEPTS
The
following terms concerning this study will be defined for better understanding
of the study.
Government Expenditure
Represent
the cost of carrying out its various activities or it refers to the value of
goods and services provided through the public sector.
Fiscal Policy
Is
concerned with action of the government to spend money, or to collect money in
taxes, with the purpose of influence the condition of the national economy,
(Tom-Ekine, 2009).
Inflation
Means
a general increase in the price of goods and services in all sectors of an
economy.
Current Expenditure
This
defines expenditure incurred by the government for the production of goods and
services in a country within a year.
Recurrent Expend
By
recurrent expenditure we mean all day-to-day running cost of the government.
They involve all expenditure by the government. They involved all expenditure.
Capital Expenditure
By
capital expenditure we mean costs of bringing into existence new institutions,
services and projects.
Galloping Inflation
This
type of inflation is characterized with an exceptionally high rate but for a
relatively short period. It is generally characterized by accelerating rates of
inflation so that the rate of changes is significant within a period as short
as one month, (Anyawn, 1993).
Creeping Inflation
This
type of inflation proceeds for a longtime at a moderate and fairly steady pace.
Hyper Inflation
We
mean extreme type of inflation characterized by an extremely fast rate of price
increase. Under this situation, money almost totally loss its value.
AFFILIATE LINKS:
Comments
Post a Comment