Comparative Analysis of the Relationship between Budget Balance and Selected Macro Economic Variables in Nigeria and Ghana

Abstract

The export is one of the most important macro economic variable that affects a country's budget balance. This study examines the comparative analysis of budget balance and selected macro economic variables in Nigeria and Ghana using the World Bank Development Indicators data from 1970-2012. The study through the Augmented Dickey Fuller (ADF)/ unit root test found that the variables used in the model are integrated of the order one while export and interest rate are integrated of the order zero. Using the Johansen co integration tests shows the presence of long run relationship between variables. The Error Correction Model (ECM) results suggest that export has a significant impact on budget balance in the short run and . The study therefore recommends that the competitiveness and stability of export should be given due consideration as this will increase economic growth through increased investment.

Keywords: Export, Budget Balance, ADF, ECM, Nigeria, Ghana.