ADVANCED JOURNAL OF FINANCE AND ACCOUNTING
Integrity Research Journals
ISSN: 3122-0215
Model: Open Access/Peer Reviewed
DOI: 10.31248/AJFA
Start Year: 2022
Email: ajfa@integrityresjournals.org
Effect of budget deficit and infrastructural financing on the economy of Nigeria
https://doi.org/10.31248/AJFA2024.013 | Article Number: A7F3B68B1 | Vol.2 (1) - April 2024
Received Date: 06 February 2024 | Accepted Date: 23 March 2024 | Published Date: 30 April 2024
Authors: Umezuruike, Innocent Ndidi* and Ariwa, Florence Onyinye
Keywords: economy, Nigeria., Budget deficit, economic stability, infrastructural financing, government expenditure
Nigeria has been financing budget deficits over time but their implications on economic stability have not been fully ascertained. This study sought to investigate the implications of budget deficit financing on economic stability in Nigeria between 1981 and 2021. The study adopted the Autoregressive Distributed Lag (ARDL) for its estimation. The study revealed that the total government deficit exerted a negative and significant effect on the economic growth of Nigeria. Government expenditure on transportation, government expenditure on health, and gross capital formation had a positive and significant effect on economic growth while government expenditure on education had a negative and significant effect on the economic growth of Nigeria. It was therefore recommended that deficit financing in Nigeria should be focused on the productive sectors of the economy. This is because deficit financing has merely resulted in economic instability indicating that sound policies are needed to achieve economic stability in Nigeria.
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