TY  - JOUR
AB  - Purpose This study examines the asymmetric effect of government spending on economic growth in Nigeria over the period 1980–2017. Specifically, this study investigates whether the response of economic growth to government spending shocks differs according to the nature of shocks on them. In addition, the authors examine whether the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Design/methodology/approach The study adopts the linear fiscal reaction function in addition to the nonlinear regression model of Hatemi-J (2011, 2012), Granger and Yoon (2002), which allows us to separate negative shocks from positive shocks to government spending. Similarly, the authors adopt the generalized method of moments (GMM) techniques of Hansen (1982) to account for simultaneity and endogeneity problems inherent in dynamic model.Findings The authors’ findings reveal that there is evidence of asymmetry in the government spending–economic growth nexus in Nigeria over the period of study. Specifically, the authors find that the response of economic growth to government spending shocks differs according to the nature of shocks on them. More specifically, the study established that the stabilizing effects of fiscal policies are dependent on the state of the business cycle.Originality/value Unlike the traditional method of modeling asymmetry, which adopts the simple inclusion of a squared government spending term or by the inclusion of a cubic government spending term, the model adopted in this study allows us to model shocks and show how the responses of economic growth to government expenditure differ according to the nature of shocks on them.
VL  - 37
IS  - 4
SN  - 1026-4116
DO  - 10.1108/JEAS-01-2020-0003
UR  - https://doi.org/10.1108/JEAS-01-2020-0003
AU  - Olaoye Olumide Olusegun
AU  - Okorie Ukafor Ukafor
AU  - Eluwole Oluwatosin Odunayo
AU  - Fawwad Mahmood Butt
PY  - 2020
Y1  - 2020/01/01
TI  - Government spending shocks and economic growth: additional evidence from cyclical behavior of fiscal policy
T2  - Journal of Economic and Administrative Sciences
PB  - Emerald Publishing Limited
SP  - 419
EP  - 437
Y2  - 2024/04/20
ER  -