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 conduced 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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