The Government Size – Economic Growth Relationship: Nigerian Econometric Evidence Using a Vector Autoregression Model

  •  Dickson Oriakhi    
  •  Liberty Arodoye    


This study examines the relationship between government size and economic growth in Nigeria using annually
time series data for 1970 through 2010.In order to fully account for feedbacks, a vector autoregression model is
utilized. The results show that there is a long-run relationship between government size and economic growth.
The Forecast Error Variance Decomposition results show that the main sources of Nigeria economic growth
variation are due largely to “own shocks”, government size and real gross domestic product per head innovations.
This study therefore recommends adoption of government activities expansion as a means of accelerating
economic growth in Nigeria.

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