PRESENTATION AND ANALYSIS OF EMPIRICAL RESULTS
Presentation of Empirical Results:
This study is an empirical analysis of the relationship between inflation and government expenditure in Nigeria economy from 1980-2009. In order to examine properly the impact of government expenditure on change in inflation rate in Nigeria the researcher employed ordinary least square method with the use of E-view statistical package for a realizable results. Thus, having stated the objective, hypothesis and model in the previous chapter, we now present below the empirical results.
Regression Model 1 by (O/S):
INNFRt = -7.776418+0.932347/nGEXD
Se = (0.406159) (0.035097)
T = (-19.14624) (26.564910
R2 = 961837
F (2,28) = 705.6944
D-W = 1.013356
The above model represent the relationship between inflation rate as a function of government expenditure in Nigeria economy.
However, the results reported that government expenditure (GEXD) has a positive relationship with the independent variable (INFR). The implication of this outcome is that a unit increase or decrease (charge) in government expenditure (GEXD) the independent variable, will increase or decrease the rate of inflation by (0932347)% in the economy during by the period under review. In other words, a charge from the GFXD, will bring about charge in the INFR in the same direction and on the same proportion. This is in line with the initial or a –prior assumption in economic theories. Meanwhile, the dependent has a negative sign. This implies that at constant value or if the government expenditure is been held constant, the inflation rate will stood at -7.776418 precut.
The R2 – square shows a very strong value at 0.961837. This mean that government expenditure impact about 96% total variation in inflation rate in Nigeria economy. While 4% out of 100% variation of inflation rate were factors not included in the model but captured by the error terms in the model.
The F- statistic also shows statistical significant with value of 705.6944 precut at 5% level of significance. Thus the D. W statistic stood at 1.013356. This mean that there is no presence of autocorrelation in the model since the D. W value rank just 190.
Testing the hypothesis using T-Statistic
|
Variables |
t-cal |
t-table |
Observation |
Decision Rule |
|
Log (GEXD) |
26.56491 |
2.096 |
T-cal>T-table |
Reject the null hypothesis |
The t-statistic is use to test the statistical significance of the individual independent variables is employed to test the hypothesis of this study at 5% level of significance. The critical value or the T-tabulates values at 5% levels of significance is 2.096 while the T-calculate value or computed t-value of the independent variable is (ie) log GFXD (26.5649) which is greater than the critical value Based on the statistical decision rule, we reject the Null hypothesis and accept the alternative hypothesis that side that government expenditure has a positive significant relationship with the inflation rate in Nigeria.
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS
Summary of Findings
Owing to the constant increase in price of committees in the economy and the volume of government expenditure in the country, this study.
Aim to examine the relationship between inflation rate and the government expenditure in Nigeria from 1980-2009. Having examined and analyzed the empirical result in chapter four, the information found are follows:
1. The independent (GEXD) and dependent (INFR) variables has the right sign and here in line with their a- priori theory.
2. The R2 was found statistically significant at 0.965. contributing about 96% total in variation of inflation rate by the independent variable (GEXD).
3. The result satisfied the objective while the Null hypothesis was rejected. This rejection of the Null hypothesis implies acceptors that there exists a positive significant relationship between inflation rate government expenditure in Nigeria during the period under review (1980-2009).
4. form the D. W. statistic, it was found that there is first order autocorrelation in the model.
Conclusion
From the finding of the study we co
nduced that charge in government expenditure during the study (1980-2009) tend to heighten the level of inflation rate in Nigeria economy. Considering the implication of the results for policies, it can be concluded that government expenditure in Nigeria can be use as a tools for solving or controlling the high level increase of inflation rate since it contribute or influence about 96% holding other factor constant. Therefore the government authorizes should put in place the expenditure that will came down the inflation rate in the system economy.
Recommendation
Following from the observation and the implication of this result, we recommended that;
1. Government should put in place the appropriate policies that will help them to channel their expenditure to the right sector (productive) which will not only be utilized well but will help control the inflation rate at a permeatable rate in the economy. This will carry both inflation rate at normal level that enable the investor’s to invest and employed more worker’s thereby reducing the unemployment rate in the Nigeria economy.
2. That government should continue to embark on inflationary targeting as a means of cushioning the impact of inflationary pressure in Nigeria.
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