Acta Universitatis Danubius. Œconomica, Vol 14, No 7 (2018)

Abstract

This study tests Wagner’s law in Nigeria in both the short and long-run using the autoregressive distributed lag (ARDL) technique of estimation and controlling for structural breaks between the periods 1981-2016. Results showed that both in the short and long-run, evidence pointed to a negative but insignificant relationship between government expenditure and economic growth, with a larger negative effect in the long-run. The study controlled for oil export earnings, which was found to positively and significantly influence government spending. It was therefore recommended that the economy be diversified into more labour intensive sectors so as to increase output per worker.