IMPACT OF GOVERNMENT EXPENDITURE ON ECONOMIC GROWTH IN NIGERIA

📄 Project Abstract

Government Expenditure and Economic Growth have a strong relationship which has been argued about for a long time now. In 1936, Keynes argued that the solution to economic depression is achieved by persuading the firms to invest through reduction of interest rates and government capital investment which includes infrastructure. Many scholars have the belief that an increase in government expenditure increases the growth of an economy, meanwhile other scholars believe otherwise. The neo classical school of thoughts argue that increasing government expenditure could decrease the aggregate production of an economy. Their argument is; in order for the government to increase their expenditure, they definitely need financial resources which are generated through increment of Tax or Borrowing from abroad. Increment of tax may lead to a decrease in income and aggregate demand because higher taxes discourage additional work. Furthermore, increasing Tax leads to increase in costs of production a...