A REGULATION OF MARKET FORCES
BACKGROUND
OF THE STUDY
Inflation rate has continued to rise in Nigeria over
the years, consumer goods are scarce and output supply hardly ever comes close
to meeting the demand of consumers. The value of the Nigerian currency (i.e.,
the Naira) is unstable and fluctuates in the down ward direction. Government, year by year announces
budgets and policies whose objectives include the reduction of the inflationary
rate.
Despite the desperate measures taken so far, inflationary rate still
persist. Like in the case of petroleum products, price of the products
increases everyday and invariably leads to further fail in standard of living
of the citizenry. Irrespective of the amount one earns, the impact is
necessarily the same, though, more money tends to make up for some of the
effects.
Therefore, the problem of inflation
affects not only the economy, but also the structural development of the
economy. Inflation is attributed to a number of factors among which are falling
OUTPUT levels. Increases in transfer payments, government polices. Economic
dependence on foreign input and so on though, the majority of the masses blame
the government for the macro economic problem of the economy. This is done
whether or not peoples underhand the dynamic nature of political economy or the
relationship between the activities of government and inflations. Hence, the
essence for this study is to investigate the relationship between government
expenditures and inflation rate in Nigeria.
Statement
of the Problem
The continued rise in general price
level in Nigerian economy seems persistent and uncontrollable. From available
evidence and statistics, which show a lingering presence of an increasing
inflationary rate there is no administration in the country that has not had to
address this problem and aim towards it reductions. This problem of inflation
hinders economic activities. It has dons this time past and the trend
continues. Government, yearly propose policies to find lasting solution to this
persistent problem of inflation using macro economic policies and other
management technologies.
The fact that this obstacles,
inefficiency in economic activity, growth and development persistence points to
the fact that root causes have been identified, they have not been rightly
tackled.
Attempts made by authorities to
tackle this problem and solving it induced the researcher towards conducting
this study, another significant or prompting for this study is found in the
debates on the future of economic policies to resolves the inflationary,
problem but he debate covers the issues of why government expenditure
activities has failed to reduced the inflationary rate in the in the economy.
It is against this background that this study is being envisaged.
Objectives
of the Study
The objectives of carrying out this
research work are:
1.
To determine
whether there is a relationship between government expenditure and the rate of
inflation in Nigeria.
2.
To assess the
impact of government expenditure on the rate of inflation.
3.
To proffer
solution towards improving economic policy based on finding of the study
4.
To ensure
adequate regulation of market forces.
5.
To ensure
equitable income distribution in Nigerian economy.
Hypothesis
of the Study
This study is guided by the
following hypothesis
H0
b i = 0 => there is no significant relationship between government
expenditure and inflation rate in Nigeria.
Hi
Bi N 0 => there is significant
relationship between government expenditure and inflation rate in Nigeria.
Significant
of the Study
The importance of this study covers every arm of it.
The study is intended to provide an understanding of the relationship between
government expenditure and rate of inflation, in this light it will provide
scholars with more intellectual raw materials for further studies. This is so because
the study will facilitate the understanding of the importance of government
expenditure in macro economy policy. Since the problem concerns the entire
society and the policies formulated and implemented by the government have a
multiplier effect on the whole economy, the society will benefit from this
study since its findings will help in tackling the problem.
Scope
and Limitation of the Study
The purpose of this study is to
determine the relationship between inflation and government expenditure in
Nigeria from 1980-2019.
The successful implementation of
this study was constrained by factors like.
1.
Lack of financial
resources
2.
Limited
accessibility to data and literature
3.
Limited time for
the research work.
Definition
of some Terms
Inflation: This refers to the
persistence rise in the general price level of goods and services over a period
of time.
·
Government Expenditure: This refers to the money government spends in
carrying out recurrent and capital expenditures in a country.
·
Macro Economic Policies: These are government policies adopted to regulate
the aggregate socio-economic activities in the country.
·
Economic Development: The processes where a country’s real per capita Gross
National Product (GNP) or income increases over a sustainable period of time
through continuous increase in per capita productivities.
·
Stagflation:
This is a situation in which rapid inflation is accompanied by declining output
and unemployment.
Galloping
Inflation: This is a situation in which prices rise so rapidly
that money quickly loses its value with the attendant loss of confidence in the
monetary system by people.