Effects of Shocks on Education Spending on Economic Growth in Nigeria

International Journal of Research and Scientific Innovation (IJRSI) | Volume VIII, Issue I, January 2021 | ISSN 2321–2705

Effects of Shocks on Education Spending on Economic Growth in Nigeria

Faizah Adhama Mukhtar¹, Nadira Madaki Iliyasu² and Maryam Rabi’u Zakariyya^3
1&2 Federal University Dutse, Jigawa State
³Kano State College of Education and Preliminary studies

Abstract: The effect of shocks on budgetary education spending on economic growth in Nigeria is looked at through Structural Vector Autoregressive (SVAR) Model and annual data from 1981-2016. Data was obtained from central bank of Nigeria statistical bulletin and world development indicator. Result of SVAR reveals that the response of GDP to a shock on budgetary capital education spending, budgetary recurrent education spending and total federal collected revenue is significant. Response of GDP to shocks on budgetary capital and budgetary recurrent spending on education in the short run is negative but turned out to be positive in the long run. The study therefore advice that government should consider the effective use of education spending in order to achieve economic growth; and that revenue base should be broadened through effective and efficient tax system.

Key words: Fiscal policy, budgetary education expenses, Nigeria, GDP, SVAR

I. INTRODUCTION

Keynes during the great depression came up with fiscal policy as an effective gadget for economic stabilization; this device successfully brought the European economies back on track and from then on words it’s seen as an effective stabilisation tool. The problem is Nigeria has witnessed and is still witnessing series of swings in the country’s budgetary spendings level as a result of economic depression of the 1980’s and that of 2015. The country is also linked with budget deficit and huge public external debt (Chikezie, Joe & Tarila, 2016). Empirical reviews on Nigeria used diversity of models such as Ordinary least square (OLS), Cointegration, Vector Autoregressive (VAR) model, Autoregressive Distributed Lag Model (ARDL) in order to empirically find answers pertaining the relationship amid education spendings and economic growth. However, going by the collection reviewed literature, it is somewhat astonishing that there are no comprehensive studies that consider studying the effects of shocks on budgetary education spendings on economic growth and the magnitude of the changes, as a result of which the study intends to fill in this gap. In relation to this, the objective is to look at the effects of shocks on budgetary education spendings on Nigeria’s economic growth and its magnitude from 1981 to 2016. The study consist of five portions; introduction which take account of background and statement of research problem; literature review which contains of conceptual, theoretical and empirical reviews;

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