Trade Openness and Government Expenditure Nexus in Nigeria: A Bounds Test Cointegration Approach

This study examined the trade openness and government Expenditure nexus in Nigeria over the period 1980-2013. To analyze the relationship among openness, recurrent expenditure, capital expenditure, total expenditure and exchange rate we adopted ARDL modelling approach to cointegration which is most appropriate technique over some other techniques of integration after examined the stationarity of data through ADF and KPSS tests. The bound testing procedure is used to determine the existence of long run relationships among variables. The results show that there is no cointegration among the variables. Capital expenditure and recurrent expenditure have negative and significant effect on openness while total expenditure and exchange rate on the other hand are positive and significant.