FISCAL DEFICIT AND ECONOMIC GROWTH IN NIGERIA
Resumo
The study assessed the impact of fiscal deficit on economic growth in Nigeria from 1981 to 2018 using annual time series data. The major objective of the study was to determine the impact of fiscal deficit on economic growth in Nigeria. The study used the Autoregressive Distributed Lag (ARDL) model and the Granger Causality test to carry out its objectives. Findings from the study revealed that fiscal deficit had a negative impact on economic growth in Nigeria over the study period. The result of the Bound test confirmed the presence of co-integrating relationship between fiscal deficit and economic growth. The Granger causality test revealed that fiscal deficit does not cause economic growth and vice versa. To reverse the negative impact of fiscal deficit on the economy, the government needs to reassert control over expenditures by implementing a credible programme of fiscal deficit reduction that would keep government spending at sustainable limit while budget deficit amounts should be used more for capital formation purposes.
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