Esther Olayinka, Isiaq Olasunkanmi Oseni, Jimoh Sina Ogede, Soliu Bidemi Adegboyega
The Nigerian economy has experienced a decline in its growth rates, which has coincided with a gradual rise in government expenditures. Unravelling the interrelationship between these variables is crucial in understanding the implications of Government expenditure on economic development and the potential inflationary consequences. This study is to offer significant comprehension of the efficacy of fiscal policies and the consequences for Nigeria's overall economic performance by examining the correlation between Inflation, economic expansion, and public spending. Annual series data spanning 1990 to 2021 is utilized for the study. Economic growth, is the dependent variable whereas, Government aggregate expenditure, disaggregated government expenditure (Recurrent expenditure and Capital expenditure), inflation, and money supply are independent variables. Data is gotten on the World Development Indicator (World Bank) and Nigerian Central Bank Statistical Bulletin. The study employed Auto regressive Distributed Lag. The empirical finding demonstrates a substantial and positive correlation amid the growth in the economy and aggregate administration expenditure, recurrent government spending and money supply, while inflation and total current spending exhibit an adverse impact on growth in economy. As a result, it might be suggested that the government should improve efficiency and competence in resource apportionment to sectors and projects that exhibit a greater capacity to stimulate economic progress such as infrastructure, education, health, research and development. It is also imperative to adopt a monetary policy that ensure price stability, encourage competition and reducing regulatory constraints as well as encouraging entrepreneurship.