The Impact of Budget Deficit on the Nigerian Economic Growth, 1983 – 2014

Abstract

This study is on the impact of Budget Deficit on the Nigerian economic growth, 1983 – 2014. It was carried out to determine the long-run effect of deficit budgeting and the inflationary pressure in Nigeria using times series data. Two null hypotheses to determine whether there is a significant relationship between inflation and deficit budget; inflation and money supply were stated. The researcher used the method of OLS regression analysis to analyse the data. Further, ADF was used to test for the stationarity of the variables while cointegration test was conducted to determine the long-run relationship among the variables. The found that there is a significant relationship between the deficit budget and inflation as well as money supply and inflation. Finally, the researcher recommended, among others, that the Nigerian government should display a high sense of transparency in fiscal operations to bring about realistic fiscal deficit and the need to strengthen monetary policies to act as checks and balances used to complement fiscal policies.

Keywords: Deficit Budget, Inflationary Pressure, Money Supply