Effect of Government Administrative and Social Expenditure on Economic Growth in Nigeria as Moderated by Monetary Policy Rate

Abstract

The study exploits the effect of public administrative and social spending on economic growth in Nigeria as moderated by monetary policy rate. This study adopts the ex post facto research design and collected data from the CBN and National Bureau of Statistics over the period 1986 to 2022 culminating in thirty-six (36) years. The study conducted the unit root test using the Augmented Dickey-Fuller test and found all variables to be stationary at level which denotes that there will not be any spurious result in the study. From the analysis, the study found that there is an existence of an equilibrium relationship among the variables and over 98% of disequilibrium can be corrected over a year. From the OLS, the study found that the monetary policy rate has a significant moderating effect on the relationship between government administrative expenditure and economic growth in Nigeria. On the other hand, the study found that the monetary policy rate has a non-significant moderating effect on the relationship between public social expenditure and economic growth in Nigeria. The study concludes that the monetary authority should be sensitive in directing its policies such as interest rates because they indirectly impact government expenditures that can propel economic growth. The study recommends that the monetary authority use an expansionary monetary policy to reduce interest rates and encourage more investment, stimulating economic growth in Nigeria.