Government and Economic Growth in Nigeria 1970 – 2007

The study relates to the econometric analysis of the relative effectiveness of fiscal policy management in Nigeria, between 1970 and 2007. It employed reduced forms model in addition to, Beta coefficient, Theil’s inequality and Root Means Square Error (RMSE) techniques to investigate the stability and effectiveness of the estimated fiscal model which represent government spending, during and after estimation periods. The results reveal stability of the models and further confirmed the fact that government spending is the major determinant which influences and predict Nigeria macro economic activity. There is what appears to be a manifestation of the so-called ‘crowding out’ effects of fiscal policy actions in Nigeria. These are associated with the negative sings assumed by coefficients of the lagged fiscal policy variables (except recurrent expenditures). Key words: Econometric Analysis, Government spending system of government, economic growth and crowding out effects Government spending habit is supposed to be guided by the fiscal Policy which is defined as actions taken by the government to alter the level of its taxes and expenditures in order to bring about desired changes in macro economic activity. Fiscal policy is supposed to work harmoniously with other set of policies such as monetar