Relative Maxima of the Public Sector: A Comparative Study of Nigeria and Ghana

International Journal of Academic Research in Business and Social Sciences 2016, Vol. 6, No. 12, ISSN: 2222-6990

15 Pages Posted: 26 Jul 2017

See all articles by Uchechi Shirley Anaduaka

Uchechi Shirley Anaduaka

University of Nigeria - Department of Economics; Lingnan University

Vivian Nnetu-Okolieuwa

University of Nigeria - Department of Economics

Ekene Aguegboh

University of Nigeria - Department of Economics

David Iheke Okorie

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE); University of Nigeria - Department of Economics

Date Written: July 16, 2015

Abstract

Over the past year(s), government’s aggregate expenditure has been less than its aggregate expenditure the present year(s) in Nigeria and Ghana. This has made the government size of these economies big enough to command a significant economic growth in these countries, but this is not the case in these countries. This work adopted a concave parabolic model from the origin which portrays the Armey curve model to empirically validate not only the existence of Armey curve hypothesis but also to fond the optimizing government expenditure of Ghana and Nigeria, using time series data from 1970 to 2014. The result showed that Armey curve hypothesis exists both in Nigeria and Ghana. However, the result shows a strong statistical influence of Armey hypothesis in Nigeria than in Ghana. Adopting the Relative Maxima methodology, the Government of Nigeria and Ghana should spend and 9.8 respectively, of her gross domestic product (GDP) to attain the optimal growth of ₦9.96 Trillion Naira and ₡6.422 million respectively. The researcher recommends that these governments should cut down their expenditure to the optimizing size of their governments so as to grow effectively and efficiently which is a macroeconomic goal of every economy.

Keywords: Public Sector, Government Expenditure, Government Size, Economic Growth, Ghana, Nigeria

Suggested Citation

Anaduaka, Uchechi Shirley and Nnetu-Okolieuwa, Vivian and Aguegboh, Ekene and Okorie, David Iheke, Relative Maxima of the Public Sector: A Comparative Study of Nigeria and Ghana (July 16, 2015). International Journal of Academic Research in Business and Social Sciences 2016, Vol. 6, No. 12, ISSN: 2222-6990. Available at SSRN: https://ssrn.com/abstract=3003549

Uchechi Shirley Anaduaka

University of Nigeria - Department of Economics ( email )

Department of Economics,
University of Nigeria Nsukka
Nsukka, Enugu State 4100002
Nigeria

Lingnan University ( email )

8 Castle Peak Road
Lingnan University
Hong Kong, New Territories
China

Vivian Nnetu-Okolieuwa

University of Nigeria - Department of Economics ( email )

Department of Economics,
University of Nigeria Nsukka
Nsukka, Enugu State 4100002
Nigeria

Ekene Aguegboh

University of Nigeria - Department of Economics ( email )

Department of Economics,
University of Nigeria Nsukka
Nsukka, Enugu State 4100002
Nigeria

David Iheke Okorie (Contact Author)

Xiamen University - Wang Yanan Institute for Studies in Economics (WISE) ( email )

A 307, Economics Building
Xiamen, Fujian 10246
China

University of Nigeria - Department of Economics ( email )

Department of Economics,
University of Nigeria Nsukka
Nsukka, Enugu State 4100002
Nigeria

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