ABSTRACT

The study has investigated the effect of inflation on government spending in Nigeria for a period of 35 years (1981-2015) using the OLS estimation technique and a multi regression framework. The key findings of the study can be summarized as; There is no significant relationship between inflation and government expenditure in Nigeria and there is also unidirectional causal relationship between inflation and government expenditure in Nigeria, flowing from government expenditure to inflation. Based on the findings of this study it is thus recommended that; To control expenditure, the government should regulate inflation by using various monetary policy measures available. And that transparency and accountability of government tax officials at various levels and transparency and fiscal discipline in government should be encouraged by enacting a financial responsibility bill to sensitize and enthrone financial probity in Nigeria.