Effect of Disaggregated Public Expenditure on Inflation and Unemployment in Nigeria

The study examined the effect of government expenditure on inflation and unemployment in Nigeria, covering the period 1994–2023. Specifically, the study disaggregated government expenditure into economic, social, and administrative components to evaluate their individual impacts on key macroeconomic variables. An ex-post facto research design was adopted, relying on secondary data from the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The Vector Erro Correction model specification was adapted to test the relationship between the independent variables and the dependent variable. The results of the first regression revealed that government economic expenditure (GEE) and government social expenditure (GSE) have a statistically significant negative effect on inflation (INF). This suggests that increased spending in productive and social sectors helps to stabilize prices and mitigate inflationary pressures. Conversely, government administrative expenditure (GAE) was found to exert a positive and significant influence on inflation, indicating that excessive recurrent spending fuels price instability. The second regression result demonstrated that government economic expenditure (GEE) exerts a significant negative impact on unemployment (UEM), underscoring its role in job creation and economic empowerment. In contrast, government social expenditure (GSE) and administrative expenditure (GAE) showed no significant effect on unemployment, implying that such expenditures may not directly translate into employment opportunities in Nigeria. The study concludes that while productive and social investments are effective tools for curbing inflation, only economic expenditure significantly reduces unemployment. It recommends prioritizing capital-oriented and growth-inducing spending while rationalizing administrative costs.