Benue State University, Makurdi

Fiscal Actions and Private Expenditures in Nigeria: Any Evidence of Growing-Out Effects?

Okpanachi Usman Moses

Abstract

The paper recognizes the connection between government's fiscal actions and the macro economy. In certain situations, government's fiscal actions compliment those of the private sector. In others they tend to substitute one another. Private consumption and public consumption especially have been noted as capable of exhibiting any of the two forms of relationship. Using a single equation model, this paper seeks to determine this relationship in Nigeria. The estimates of the regression equation indicate that public consumption expenditures tend to substitute (crowd-out) private consumption, especially when additional public sector consumption expenditures are financed by deficits. The major policy implication is that to step-up private consumption (in the face of the enormous resource constraints), public expenditures (especially, the deficits) have to be kept within sustainable limits.

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