Economic Aggregates, Sustainable Development and Dialectics of Deficits in Nigeria

Abstract

The dialectics of deficits in Nigeria are associated with gross domestic product, inflation, interest rates and money supply in the economy. In This study, time series relating to these variables are drawn from publications of the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS). They are subsequently analyzed using econometric methods with a view to establishing the extent of relationship among the various variables. The analytical outcomes reveal that budget deficits are significantly related to gross domestic product, inflation, interest rates and money supply in Nigeria. To justify the subsisting deficit financing regime, it is recommended that key organs of government should uphold the strategic ideals of economic management and administration, especially budgeting objectivity, fiscal frugality and investment viability. Furthermore, the fiscal correlates of macroeconomic growth and development should be purposely directed at achieving sustainable downward movement in prices, including cost of borrowing, so as to ultimately stimulate rather than merely simulate the Nigerian economy.

Keywords: Deficit financing, Infrastructure investment, Nigerian economy