Abstract

This paper examines the relationship between public expenditure and economic growth in Nigeria during the period 1970-2009. A disaggregated public expenditure level was employed using the Gregory-Hansen structural breaks cointegration technique. The result confirms Wagner’s law in two models in the long run; there was a break in 1993 in which the political crisis that engulfed the nation was accountable. The result also shows that economic growth and development are the main objectives of government expenditure, especially investment in infrastructure and human resources all of which falls under social and community services. Based on the result, there should be efforts to maintain adequate levels of investment in social and economic infrastructure.

Key words: Public expenditure, economic growth, structural breaks, cointegration.