Journal of Finance and Economics

Journal of Finance and Economics

ISSN: 2291-4951 (Print)    ISSN: 2291-496X (Online)

Volume 1 (2013), No. 2, Pages 14-27

DOI: 10.12735/jfe.v1i2p14

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An Analysis of the Relationship between Public Spending Components and Private investments in Nigeria

Nwosa Philip Ifeakachukwu1  Oyeyemi Omodadepo Adebiyi1  Adedayo Oluseun Adedeji1 

1College of Management Sciences, Bells University of Technology, Ogun State, Nigeria

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This paper examined the relationship between components of public spending and private investments in Nigeria for the period 1981 to 2010. Utilizing an error correction modeling procedure, the study revealed that components of public spending have different impact on private investment both in the long run and the short run. Specifically, recurrent and government final consumption expenditure had positive (crowd-in) effect on private investment while capital expenditure had negative (crowd-out) effect on private investment. Thus, the study recommended that greater emphasis should be placed on capital expenditure.

JEL Classifications: H50, H54

Keywords: capital expenditure; credit to private sector; foreign direct investment; government final consumption expenditure; recurrent expenditure

To Cite this Article: Nwosa, P. I., Adebiyi, O. O., & Adedeji, A. O. (2013). An analysis of the relationship between public spending components and private investments in Nigeria. Journal of Finance and Economics, 1(2), 14-27.

Copyright © Nwosa Philip Ifeakachukwu et al.

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This article is published under license to Science and Education Centre of North America. This is an Open Access article distributed under the terms of the Creative Commons Attribution 4.0 International License.

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An Analysis of the Relationship between Public Spending Components and Private investments in Nigeria