Econometric Study of the Impact of Budget Deficit on Nigeria Economy

Econometric Study of the Impact of Budget Deficit on Nigeria Economy.

ABSTRACT

This research work was embarked upon with a view to empirically investigate the impact of budget deficit on Nigerian economy.3specific objectives, 3 research questions and 3 research hypotheses were formulated to guide the study on the impact of budget deficit on the economy.

The data was obtained from the CBN Statistical Bulletin (1970 – 2016) and analyzed using ordinary least square analysis. The results showed that an increase in money supply and FDI and decrease in budget deficit brings an improvement in the economy of the nation.

It was recommended that commitment to budget should be encouraged for fiscal discipline on the part of the government and its agencies. The government and the Debt Management Office (DMO) should draw up guidelines to limit the growth of future domestic debt.

INTRODUCTION

Budgeting generally can be said to be a control device in an organisation designed to ensure that activities pursued within the budget period are such that contribute to the achievement of the organisation’s objectives.

For government, its objectives are the provision of services and improvement of the living standard of the people.

Budget deficits have been a subject of great interest and debate among economists for many years, and so the issues surrounding fiscal deficits are certainly not new, but have led to renewed interest in fiscal themes.

In developed countries, the continued growth of the Nigerian deficit has provided the impetus for a reassessment of the effect of fiscal deficits on economic activity. In developing countries, fiscal policy, particularly the reduction of fiscal deficits, has been one of the cornerstones of short-term stabilization and medium-term adjustment programs.

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