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Article Title:
Stabilization Effects of Social Spending on Economic Growth in Selected Two West African Countries
by Ogudo, P. A. and Udah, E. B.

Abstract:
This study set out to investigate the stabilization effects of social spending on economic growth in two selected West African countries (Nigeria and Ghana) using time series data from 1980 to 2015. The study aimed at specifically evaluating the cyclical behaviour of social spending, the optimal size of public social spending and the efficacy of public social spending to smoothen fluctuations in output. Data were sourced from IMF?s World Economic Outlook (WEO) database, the Central Banks of selected countries and World Development Indicator Database. The paper adopted Auto-Regressive Distributed Lag (ARDL) Bounds testing approach as estimation technique and error correction mechanism (ECM) within a dynamic framework. The results showed that social spending on health was pro-cyclical in Ghana and counter-cyclical in Nigeria. Social spending in education was pro-cyclical in Nigeria and counter-cyclical in Ghana. Findings of this paper also revealed that the optimal government size that will maximize growth of GDP in Ghana and Nigeria were 86.6 and 58.2 per cent of GDP respectively. This paper among others recommended that there is need for government whose expenditure in health and education are counter-cyclical to develop a framework to take care of efficient losses emanating from redistribution and leakages arising from these expenditures. This constraints could lead to decline in long-term GDP.

Keywords: Stabilization Policy, Pro-Cyclical, Counter-Cyclical, Government Expenditure, Bounds Econometric Approach

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