Budget Deficit and Economic Growth in Liberia: An Empirical InvestigationAJHSSR Journal
: This paper investigates the relationship between budget deficits and economic growth in Liberia.
The study employed: the Classical Ordinary Least Squares Technique (OLS); The Augmented Dickey Fuller
(ADF) and Phillip Perron unit root tests for stationarity; the Co-integration test using Engle-Granger Two-Step
procedure (EGTS); and a parsimonious Error Correction Model of the relationship between Budget deficit and
economic growth in Liberia. It is evident from the analysis that there exists a long run relationship between Budget
deficit and economic growth in Liberia. There also exists a positive and significant relationship between Budget
deficit and economic growth in Liberia. Therefore, a 1.0 percent increase in deficits will result in an increase of
approximately 0.42 percent in economic growth in Liberia. The study recommends that government, policy makers
and the monetary authorities should ensure an appropriate mix of monetary and fiscal policies such that would
deliberately and strategically maximize the growth potentials of deficits in Liberia.
JEL Classification : C2, E1, E2, O4, O5
KEYWORDS: Budget Deficit, Economic
A primer on the U.S. federal budget deficit, including an examination of political policies and economic factors adding to the deficit and a look at future deficit projections
Budget Deficit and Economic Growth in Liberia: An Empirical InvestigationAJHSSR Journal
: This paper investigates the relationship between budget deficits and economic growth in Liberia.
The study employed: the Classical Ordinary Least Squares Technique (OLS); The Augmented Dickey Fuller
(ADF) and Phillip Perron unit root tests for stationarity; the Co-integration test using Engle-Granger Two-Step
procedure (EGTS); and a parsimonious Error Correction Model of the relationship between Budget deficit and
economic growth in Liberia. It is evident from the analysis that there exists a long run relationship between Budget
deficit and economic growth in Liberia. There also exists a positive and significant relationship between Budget
deficit and economic growth in Liberia. Therefore, a 1.0 percent increase in deficits will result in an increase of
approximately 0.42 percent in economic growth in Liberia. The study recommends that government, policy makers
and the monetary authorities should ensure an appropriate mix of monetary and fiscal policies such that would
deliberately and strategically maximize the growth potentials of deficits in Liberia.
JEL Classification : C2, E1, E2, O4, O5
KEYWORDS: Budget Deficit, Economic
A primer on the U.S. federal budget deficit, including an examination of political policies and economic factors adding to the deficit and a look at future deficit projections
Foreign Aid and Fiscal Behaviour in Nigeria: An Impact Assessment of Deregula...iosrjce
The study examined the influence of deregulation on the relationship between foreign aid and fiscal
behaviour in Nigeria. The equation which described foreign aid as function of important fiscal variables and
other macroeconomic variables is derived from the famous two-gap model. Chow test is used to examine if there
is any structural changes since the adoption of deregulation that has significantly affected the relationship
between foreign aid and fiscal behaviour. The result shows that deregulation has positively and significantly
affected the impact of fiscal behaviour in Nigeria on foreign aid accessibility. But the effect has been short-lived
recently owing to the recent drastic fall in foreign aid available to Nigeria despite the sustained increase in both
government revenue and expenditure. It is recommended that assessment of other shocks that can affect the
fiscal behaviour in Nigeria should be conducted with a view to getting the reason why deregulation fails to
maintain positive relationship that exists between fiscal behaviour and foreign aid in Nigeria.
I prepared this slide on my research paper 'fiscal deficit and inflation ' on the current economic situation of India. In this data has been collected from economic survey 2011-12 and several other books. This slide has full data how the the central govt. and central bank uses their, fiscal policy and monetary policy respectively Hope, it will provide a good help for students who want to know about these concepts of economics.
gaurav tripathi(undergrad econ)>
An Analysis of the Relationship between Fiscal Deficits and Selected Macroeco...IOSR Journals
This study investigates the relationship that exists between the Government Deficit Spending and selected macroeconomic variables such as Gross Domestic Product (GDP), Exchange Rate, Inflation, Money Supply and Lending Interest Rate. The period covered is 1970 (when the civil war ended) and 2011. Ordinary Least Squares (OLS) technique was adopted to analyze the relationships. The study concludes that Government Deficit Spending (GDS) has positive significant relationship with GDP. Government Deficit Spending also has positive significant relationship with Exchange Rate, Inflation, and Money Supply. Government Deficit has negative significant relationship with Lending Interest Rate and most likely crowd-out the private sector by raising the cost of funds. Deficit spending has been known to have adverse effects on the economy and government is advised to curtail excessive deficit spending. It is recommended that further research is done to establish other variables that are affected by government deficit spending.
All the information about the fiscal policy is provided in this slide for ever BBA student it is easy to understand the fiscal policy and its terms and types INFORMATION FOR CLASS PROJECTS AND CLASS PRESENTATION
Contents:
1. What is Fiscal Policy?
2. Instruments of Fiscal Policy
3. Measures
4. Role in development of the Economy
5. What is Budget?
6. Revenue Receipts
7. Capital Receipts
8. Capital Expenditure
9. Budget Surplus
10. Budget Deficits
11. Balanced Budget
This ppt contains
Budget
Fiscal Imbalance
Deficit
Deficit Financing
Harshit Jalan
Adverse Effect of Deficit Financing
Need
Is deficit financing inflationary
Fiscal policy consists of measures related to central and local government revenue and expenditure. Monetary policy consists of the measures which affect the supply of money and credit and the rate of interest. Changes in the supply of money and in the rate of interest are generally closely interrelated in the sense that, other things being equal, an increase in the supply of money and credit is likely to produce a fall in the rate of interest, and vice versa. A broader definition of monetary policy adopted here includes also measures taken to change the exchange rate.
Foreign Aid and Fiscal Behaviour in Nigeria: An Impact Assessment of Deregula...iosrjce
The study examined the influence of deregulation on the relationship between foreign aid and fiscal
behaviour in Nigeria. The equation which described foreign aid as function of important fiscal variables and
other macroeconomic variables is derived from the famous two-gap model. Chow test is used to examine if there
is any structural changes since the adoption of deregulation that has significantly affected the relationship
between foreign aid and fiscal behaviour. The result shows that deregulation has positively and significantly
affected the impact of fiscal behaviour in Nigeria on foreign aid accessibility. But the effect has been short-lived
recently owing to the recent drastic fall in foreign aid available to Nigeria despite the sustained increase in both
government revenue and expenditure. It is recommended that assessment of other shocks that can affect the
fiscal behaviour in Nigeria should be conducted with a view to getting the reason why deregulation fails to
maintain positive relationship that exists between fiscal behaviour and foreign aid in Nigeria.
I prepared this slide on my research paper 'fiscal deficit and inflation ' on the current economic situation of India. In this data has been collected from economic survey 2011-12 and several other books. This slide has full data how the the central govt. and central bank uses their, fiscal policy and monetary policy respectively Hope, it will provide a good help for students who want to know about these concepts of economics.
gaurav tripathi(undergrad econ)>
An Analysis of the Relationship between Fiscal Deficits and Selected Macroeco...IOSR Journals
This study investigates the relationship that exists between the Government Deficit Spending and selected macroeconomic variables such as Gross Domestic Product (GDP), Exchange Rate, Inflation, Money Supply and Lending Interest Rate. The period covered is 1970 (when the civil war ended) and 2011. Ordinary Least Squares (OLS) technique was adopted to analyze the relationships. The study concludes that Government Deficit Spending (GDS) has positive significant relationship with GDP. Government Deficit Spending also has positive significant relationship with Exchange Rate, Inflation, and Money Supply. Government Deficit has negative significant relationship with Lending Interest Rate and most likely crowd-out the private sector by raising the cost of funds. Deficit spending has been known to have adverse effects on the economy and government is advised to curtail excessive deficit spending. It is recommended that further research is done to establish other variables that are affected by government deficit spending.
All the information about the fiscal policy is provided in this slide for ever BBA student it is easy to understand the fiscal policy and its terms and types INFORMATION FOR CLASS PROJECTS AND CLASS PRESENTATION
Contents:
1. What is Fiscal Policy?
2. Instruments of Fiscal Policy
3. Measures
4. Role in development of the Economy
5. What is Budget?
6. Revenue Receipts
7. Capital Receipts
8. Capital Expenditure
9. Budget Surplus
10. Budget Deficits
11. Balanced Budget
This ppt contains
Budget
Fiscal Imbalance
Deficit
Deficit Financing
Harshit Jalan
Adverse Effect of Deficit Financing
Need
Is deficit financing inflationary
Fiscal policy consists of measures related to central and local government revenue and expenditure. Monetary policy consists of the measures which affect the supply of money and credit and the rate of interest. Changes in the supply of money and in the rate of interest are generally closely interrelated in the sense that, other things being equal, an increase in the supply of money and credit is likely to produce a fall in the rate of interest, and vice versa. A broader definition of monetary policy adopted here includes also measures taken to change the exchange rate.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria 1...ijtsrd
Nigeria is a developing economy with active participation of the federal government in various economic sectors not only to promote economic growth and development but also to instill fiscal and economic discipline in the economy. Government participation in the economy means greater funding of economic activities and this is expected to impact on economic indicators. This study analyses the effect of government expenditure on inflation rate in Nigeria within a period of 39 years spanning 1981 2019 . The study specifically seek to ascertain, determine, explore and assess the extent to which government expenditures on key sectors of agriculture, education, health and telecommunications respectively affect inflation rate in Nigeria. In line with the specific objectives of this study, four research questions are raised and four hypotheses duly formulated. Data used for this study were collected from the Central Bank of Nigeria CBN Statistical Bulletin. Government Expenditure on Agriculture GOA , Government Expenditure on Education GOE , Government Expenditure on Health GOH and Government Expenditure on Telecommunication GOT are the independent variables while inflation rate INF is the dependent variable. Descriptive statistics, diagnostic test employing the Augmented Dickey Fuller and a multivariate regression based on Johanson Cointegration and Error Correction Model ECM are used to analyze the data. Our findings indicate that government expenditures on education and agriculture have positive but insignificant effect on inflation rate and on the other hand, government expenditure on health and government expenditure on telecommunications have positive and significant effect on inflation rate. Based on our findings, the study recommends that government should increase its allocation to the health and education sectors to trigger increased skills and healthcare of economic operators for enhanced human capital development and economic productivity. Government should also provide adequate infrastructures to facilitate economic growth and reduce high inflation rate. Mbanefo, Patrick Amaechi | Atueyi, Chidi Leonard "Analyzing the Effect of Government Expenditure on Inflation Rate in Nigeria (1981-2019)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-6 | Issue-2 , February 2022, URL: https://www.ijtsrd.com/papers/ijtsrd49237.pdf Paper URL: https://www.ijtsrd.com/management/management-development/49237/analyzing-the-effect-of-government-expenditure-on-inflation-rate-in-nigeria-19812019/mbanefo-patrick-amaechi
The main focus of this study is to investigate the impact of expansion in economic growth on
government expenditure in Nigeria covering the periods 1970 to 2012. Gross Domestic Product (GDP) was
used as a proxy for economic growth, and the GDP time series was decomposed using the partial sum approach
in order to achieve asymmetry in the variable. The asymmetric ARDL estimation technique was appropriately
employed in this study. The findings of this study revealed that expansion in economic growth has significant
impact on government expenditure in Nigeria. The study further provided evidence of long-run causality from
boom/expansion in economic growth to government expenditure in Nigeria but could not support any evidence
of short-run causality. The researcher recommended among others, that Governments in Nigeria should give
more impetus to policies that will guarantee sustainable economic growth.
This study seeks to evaluate the impact of public borrowing on economic growth in Nigeria using time series data from 1980 to 2018. Specifically, the study seeks to analyze the effect of domestic debt (proxy by Federal Government Bonds-FGB) and external debt (proxy by International Monetary Fund Loan-IMFL) on Nigerian’s Gross Domestic Product (GDP). To achieve this objective, secondary data was collected from the Central Bank of Nigeria Statistical bulleting and the Debt Management Office of Nigeria. A multiple regression model involving the dependent variable (GDP) and the independent variables (FGB and IMFL) was formulated and subjected to econometric analysis. These variables were adjusted with the Jarque-bera test of normality while the correlation result was used to check the possibility of multi-collinearity among the variables. The t-test was used to answer the research questions and test the formulated hypotheses at the 5percent statistical level. Results from the analysis show that a positive relationship exists between IMF Loan and Nigeria’s gross domestic product, while a negative relationship exists between FG Bonds and Nigeria’s gross domestic product, which violates the Keynesian theory of public debt. The study concludes that both domestic and external debt significantly affect economic growth in Nigeria. Therefore, it was recommended that public borrowing should be efficiently used and contracted solely for economic reasons and not for social or political reasons as this will help to avoid accumulation of debt stock over time.
A study on Budget deficit AND Its impact on the economy of BangladeshMd Showeb
Government budget deficit is the difference between government revenues and expenditures. Government has different sources of revenues. Major portion of government revenues comes from direct and indirect taxes. Direct taxes come from income and profits of individuals and institutions and indirect taxes come from import duty, supplementary duty and value added tax. It can be put in different way. Direct taxes are the part of economic revenues and incomes of individuals and institutions and indirect taxes are the part of economic transactions in the form of buy, sale, export and import transactions. If government wants accelerate its revenues to meet the growing public expenditures and to reduce the budget deficit without reducing the expenditures of different influential sectors, much efforts should be made to increase economic revenues and income as well as the economic transactions so that the government revenues can meet the growing demand of the economy with the increase in revenues from income tax, import duty, supplementary duty and value added tax. In this regard the concentration of the report is on the management of deficit budget to minimize bad effects and maximize the utilization of funds. Having budget deficit is not a problem at all. The problems lie with the government inefficiency in the management of budget deficit. The evaluation of different reasons behind deficit budget and the evaluation of different bad effects of deficit budget are two crucial parts of our discussion. The impact of budget deficit on the different sectors of the economy is addressed here with relevant information. It is further concentration point of the report to find ways to improve the management performance of the government to achieve different macroeconomic goals with the help of expansion of economic revenues and transactions. The government revenues increase with the increase in economic revenues and economic transactions. The key point of our discussion is government should not decrease the public expenditures as the population is growing. The expenditures on different public sectors have to be increased as the population is growing. But budget deficit should not grow to meet the expenditures as budget deficit has some associated problems with it. For this reason government has to concentrate on accelerating the revenue collection rapidly with the expansion of economic revenues and economic transactions. For this reason government should try to integrate different policies to achieve key macroeconomic goals.
Effectiveness of Aggregate Determinants of Deficit Financing on Capital Forma...YogeshIJTSRD
In Nigeria, despite the huge expansion of public expenditure based on the budget deficit status over the years, the expected level of economic growth as a result capital formation has not been achieved and it is against this backdrop, that this study investigated the effectiveness of aggregate deficit financing on capital formation in Nigeria for the period 1981 2019 with the help of the ARDL model of estimation. Based on the issues covered in the literature review, empirical investigations were carried out on the effect of deficit financing on capital formation in Nigeria. Results showed that External Debt Stock LNEXDBT had a positive relationship with GCF GDP in the current year, 1st and 2nd lags but statistically insignificant in the long run, Domestic Debt Stock LNDMDBT had a negative relationship with GCF GDP in the current year, 1st and 2ndyear lags and long run, Aggregate Gross Savings LNADBTS had a positive significant relationship with GCF GDP in the current year and in the long run, Aggregate Debt Service LNADBTS had a positive relationship with GCF GDP in the current year and in the long run while Total external reserves had a negative relationship with GCF GDP in the current year and in the long run. Based on the findings, the study recommended that the Government should demonstrate a high sense of transparency in its monetary and fiscal operations to curb high prevalence of external and domestic borrowing, improved gross savings to reduce the incidence of inflation which will translate to economic prosperity. Justin. C. Alugbuo | Emeka Eze "Effectiveness of Aggregate Determinants of Deficit Financing on Capital Formation in Nigeria: An Approach Based on the ARDL Model" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-5 | Issue-3 , April 2021, URL: https://www.ijtsrd.com/papers/ijtsrd39820.pdf Paper URL: https://www.ijtsrd.com/economics/market-economy/39820/effectiveness-of-aggregate-determinants-of-deficit-financing-on-capital-formation-in-nigeria-an-approach-based-on-the-ardl-model/justin-c-alugbuo
here is a ppt on 'fiscal deficit and inflation'. it basically deals , that how govt. and central govt. makes their fiscal and central policy. the problems and solutions are shown. just gotta follow them. <gaurav>
Government Expenditure and Economic Growth Nexus: Empirical Evidence from Nig...iosrjce
This study has examined the impact of public expenditure on economic growth in Nigeria using time
series data for the period 1970-2012. Secondary data were sourced from the CBN, NBS, journals, text books
etc. The adopted model was fitted with three variables: real GDP, capital and recurrent expenditure. The tools
of analysis were the ADF unit root test and ordinary least square multiple regression accompanied by pairwise
Granger causality test. The major objective of this study is to analyse the impact as well as direction of
causality between the fiscal variables and economic growth. All the variables included in the model are
stationary at level. Empirical findings from the study show that there is positive and insignificant relationship
between capital expenditure and economic growth while recurrent expenditure had a significant positive impact
on economic growth. Also, Granger causality test demonstrates a unidirectional causality running from the
fiscal variables to economic growth in validation of the Keynesian theory. Consequently, the study
recommended more allocation of resources for recurrent purposes as well; government should establish the
body that will monitor contract awarding process of capital projects closely, to guard against over estimation of
project cost and stealing of public funds.
Similar to Economic aggregates, sustainable development and dialectics of deficits in nigeria (20)
VAT Registration Outlined In UAE: Benefits and Requirementsuae taxgpt
Vat Registration is a legal obligation for businesses meeting the threshold requirement, helping companies avoid fines and ramifications. Contact now!
https://viralsocialtrends.com/vat-registration-outlined-in-uae/
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
Memorandum Of Association Constitution of Company.pptseri bangash
www.seribangash.com
A Memorandum of Association (MOA) is a legal document that outlines the fundamental principles and objectives upon which a company operates. It serves as the company's charter or constitution and defines the scope of its activities. Here's a detailed note on the MOA:
Contents of Memorandum of Association:
Name Clause: This clause states the name of the company, which should end with words like "Limited" or "Ltd." for a public limited company and "Private Limited" or "Pvt. Ltd." for a private limited company.
https://seribangash.com/article-of-association-is-legal-doc-of-company/
Registered Office Clause: It specifies the location where the company's registered office is situated. This office is where all official communications and notices are sent.
Objective Clause: This clause delineates the main objectives for which the company is formed. It's important to define these objectives clearly, as the company cannot undertake activities beyond those mentioned in this clause.
www.seribangash.com
Liability Clause: It outlines the extent of liability of the company's members. In the case of companies limited by shares, the liability of members is limited to the amount unpaid on their shares. For companies limited by guarantee, members' liability is limited to the amount they undertake to contribute if the company is wound up.
https://seribangash.com/promotors-is-person-conceived-formation-company/
Capital Clause: This clause specifies the authorized capital of the company, i.e., the maximum amount of share capital the company is authorized to issue. It also mentions the division of this capital into shares and their respective nominal value.
Association Clause: It simply states that the subscribers wish to form a company and agree to become members of it, in accordance with the terms of the MOA.
Importance of Memorandum of Association:
Legal Requirement: The MOA is a legal requirement for the formation of a company. It must be filed with the Registrar of Companies during the incorporation process.
Constitutional Document: It serves as the company's constitutional document, defining its scope, powers, and limitations.
Protection of Members: It protects the interests of the company's members by clearly defining the objectives and limiting their liability.
External Communication: It provides clarity to external parties, such as investors, creditors, and regulatory authorities, regarding the company's objectives and powers.
https://seribangash.com/difference-public-and-private-company-law/
Binding Authority: The company and its members are bound by the provisions of the MOA. Any action taken beyond its scope may be considered ultra vires (beyond the powers) of the company and therefore void.
Amendment of MOA:
While the MOA lays down the company's fundamental principles, it is not entirely immutable. It can be amended, but only under specific circumstances and in compliance with legal procedures. Amendments typically require shareholder
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
Cracking the Workplace Discipline Code Main.pptxWorkforce Group
Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
Forward-thinking leaders and business managers understand the impact that discipline has on organisational success. A disciplined workforce operates with clarity, focus, and a shared understanding of expectations, ultimately driving better results, optimising productivity, and facilitating seamless collaboration.
Although discipline is not a one-size-fits-all approach, it can help create a work environment that encourages personal growth and accountability rather than solely relying on punitive measures.
In this deck, you will learn the significance of workplace discipline for organisational success. You’ll also learn
• Four (4) workplace discipline methods you should consider
• The best and most practical approach to implementing workplace discipline.
• Three (3) key tips to maintain a disciplined workplace.
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
Digital Transformation and IT Strategy Toolkit and TemplatesAurelien Domont, MBA
This Digital Transformation and IT Strategy Toolkit was created by ex-McKinsey, Deloitte and BCG Management Consultants, after more than 5,000 hours of work. It is considered the world's best & most comprehensive Digital Transformation and IT Strategy Toolkit. It includes all the Frameworks, Best Practices & Templates required to successfully undertake the Digital Transformation of your organization and define a robust IT Strategy.
Editable Toolkit to help you reuse our content: 700 Powerpoint slides | 35 Excel sheets | 84 minutes of Video training
This PowerPoint presentation is only a small preview of our Toolkits. For more details, visit www.domontconsulting.com
LA HUG - Video Testimonials with Chynna Morgan - June 2024Lital Barkan
Have you ever heard that user-generated content or video testimonials can take your brand to the next level? We will explore how you can effectively use video testimonials to leverage and boost your sales, content strategy, and increase your CRM data.🤯
We will dig deeper into:
1. How to capture video testimonials that convert from your audience 🎥
2. How to leverage your testimonials to boost your sales 💲
3. How you can capture more CRM data to understand your audience better through video testimonials. 📊
"𝑩𝑬𝑮𝑼𝑵 𝑾𝑰𝑻𝑯 𝑻𝑱 𝑰𝑺 𝑯𝑨𝑳𝑭 𝑫𝑶𝑵𝑬"
𝐓𝐉 𝐂𝐨𝐦𝐬 (𝐓𝐉 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧𝐬) is a professional event agency that includes experts in the event-organizing market in Vietnam, Korea, and ASEAN countries. We provide unlimited types of events from Music concerts, Fan meetings, and Culture festivals to Corporate events, Internal company events, Golf tournaments, MICE events, and Exhibitions.
𝐓𝐉 𝐂𝐨𝐦𝐬 provides unlimited package services including such as Event organizing, Event planning, Event production, Manpower, PR marketing, Design 2D/3D, VIP protocols, Interpreter agency, etc.
Sports events - Golf competitions/billiards competitions/company sports events: dynamic and challenging
⭐ 𝐅𝐞𝐚𝐭𝐮𝐫𝐞𝐝 𝐩𝐫𝐨𝐣𝐞𝐜𝐭𝐬:
➢ 2024 BAEKHYUN [Lonsdaleite] IN HO CHI MINH
➢ SUPER JUNIOR-L.S.S. THE SHOW : Th3ee Guys in HO CHI MINH
➢FreenBecky 1st Fan Meeting in Vietnam
➢CHILDREN ART EXHIBITION 2024: BEYOND BARRIERS
➢ WOW K-Music Festival 2023
➢ Winner [CROSS] Tour in HCM
➢ Super Show 9 in HCM with Super Junior
➢ HCMC - Gyeongsangbuk-do Culture and Tourism Festival
➢ Korean Vietnam Partnership - Fair with LG
➢ Korean President visits Samsung Electronics R&D Center
➢ Vietnam Food Expo with Lotte Wellfood
"𝐄𝐯𝐞𝐫𝐲 𝐞𝐯𝐞𝐧𝐭 𝐢𝐬 𝐚 𝐬𝐭𝐨𝐫𝐲, 𝐚 𝐬𝐩𝐞𝐜𝐢𝐚𝐥 𝐣𝐨𝐮𝐫𝐧𝐞𝐲. 𝐖𝐞 𝐚𝐥𝐰𝐚𝐲𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞 𝐭𝐡𝐚𝐭 𝐬𝐡𝐨𝐫𝐭𝐥𝐲 𝐲𝐨𝐮 𝐰𝐢𝐥𝐥 𝐛𝐞 𝐚 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐨𝐮𝐫 𝐬𝐭𝐨𝐫𝐢𝐞𝐬."
Business Valuation Principles for EntrepreneursBen Wann
This insightful presentation is designed to equip entrepreneurs with the essential knowledge and tools needed to accurately value their businesses. Understanding business valuation is crucial for making informed decisions, whether you're seeking investment, planning to sell, or simply want to gauge your company's worth.
Economic aggregates, sustainable development and dialectics of deficits in nigeria
1. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.18, 2013
www.iiste.org
Economic Aggregates, Sustainable Development and Dialectics of
Deficits in Nigeria
Prince Umor C. Agundu1* Waleru Henry Akani2 Michael Ngei Mpia3
1. Department of Banking & Finance, Rivers State University of Science & Technology, Port Harcourt,
Nigeria
2. Department of Banking & Finance, Rivers State University of Science & Technology, Port Harcourt,
Nigeria
3. Finance & Public Affairs Analyst, Port Harcourt, Nigeria
* agundup@yahoo.com
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
1. Introduction
Successive governments in Nigeria have always expressed intentions to invest and upgrade developmental
infrastructure in the economy. This often results in fiscal deficits, as it circumstantially involves expending
beyond available financial receipts. Thus, huge deficits commonly feature in economic management and
administration of Nigeria. The aftermath of the fiscal deficits are high inflation and interest rates, among others.
Government has various modes of financing its sustainable development programs, which include taxation,
printing of more money, grants, and borrowing. The factors that occasion fiscal deficits in Nigeria have to do
with the low level of economic development, slow growth in government revenue, instability of public revenue,
poor control of public expenditure and increasing government participation in driving the economy. In many
cases, government borrows any amount required to finance the fiscal deficits, not minding the rate of interest.
However, the way fiscal deficits are financed determines the possible effects on macroeconomic fortunes. If
deficits are financed by borrowing, especially through ways and means advances, they may bear negatively on
output growth. Where they are financed through taxes and printing of more money, the inflation rate may rise.
Thus, there are intricacies associated with deficits and inflation. The more funds channeled to finance deficits the
higher the inflation rate. Inflation may be further influenced by deficits which are accommodated by monetary
policy. As the deficits cause increase in money supply, they also fuel inflation.
In some public expenditure outlay, political considerations equally outweigh economic considerations. To meet
the socio-political expectations of the citizenry, public expenditure swells thereby leading to deficits. Even when
genuine capital-intensive programs are budgeted for and made to match expected revenue, market distortions
may necessitate significant fiscal adjustments in the affected period, resulting in sharp drop in expected revenue.
In Nigeria, in the mid-1980s, there was sharp fall in oil prices. After a budget had been passed based on $22 per
barrel projection, the price fell to $17 per barrel, and the logical recourse for government was to adjust through
deficit financing. As the budget was approved, various ministries, departments and agencies were poised for
implementation, but not long, they found themselves at crossroads of miscalculations, mal-projections, attendant
distortions and floored expectations. The vicissitudes were associated with increase in prices of goods and
services with over-bearing demand on the fragile financial system. Social factors also necessitate deficit
financing, especially where there are national emergencies such as floods, earthquakes, famine and other natural
disasters. Social commitments relating to education, health and poverty reduction are capital intensive and the
desire to promote them in various communities puts pressure on government finances leading to more deficits.
Essentially, fiscal deficits, while helping to drive development of an economy, occasion some phenomenal
positive experiences in the areas of employment, investment and new businesses spring ups. Thus, deficits may
be targeted at increasing aggregate demand and intensifying multi-economic activities. Nonetheless, deficit
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2. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.18, 2013
www.iiste.org
spending by government is characterized by double-plunge outcome. It is geared towards filling possible gaps
between public revenue and public expenditure, and these have to do with the macroeconomic dialectics that
make for sustainable fiscal efficiency (Emenalo, 2002; Jhingan, 2004). In this study, therefore, budget deficit is
examined in relation to economic aggregates such as gross domestic product, inflation, interest rates, and money
supply. The pertinent research question is: To what extent is budget deficit related to gross domestic product,
inflation, interest rates, and money supply? The comprehensive research hypothesis (CRH) elicited is:
CRHO: Budget deficit has no significant relationship with gross domestic product, inflation, interest rates and
money supply.
2.
Literature Review
Although economic policies are targeted at reducing unemployment, increasing industrial productivity, and
curtailing inflation, the process usually results in budget deficits which increase public debts. With budget
deficits, government adds to national debt because it borrows to finance the deficits (Udu & Agu, 2000; Lipsey
& Chrystal, 2005). Deficits are generally associated with recession which has drastic effect on public revenue
and expenditure. It is deliberately created to fill gaps between public financial inflows and outflows as they are
applied to expenditure. The deficits bring about direct addition to gross national expenditure as government
dispenses funds in excess of takings which come in the form of taxes, enterprise earnings, public loans, deposits
and miscellaneous sources (Darrat, 2002). The dialectics of budget deficits theoretically border on the Ricardian,
Keynesian and Neoclassical views. The Ricardian adherents relate deficit finance to tax. They base their
argument on the premise that the impending burden of budget deficit is on the present and not future generation.
Accordingly, where there is an increase in deficit by certain proportion, taxes are expected to increase by the
same proportion. However, neither the amount of deficit nor the amount outstanding of accumulated debt
appears to be the major concern in the determination of interest rate (Jhingan, 2005; Begg, Fischer & Dornbusch,
2003).
Nonetheless, government may finance any level of expenditure through taxes, by borrowing money from the
public or by expanding money supply. The adverse consequences relating to budget deficit, thus, result from
excessive levels of government expenditure, which directly affect economic activity and runs through several
years. For the Keynesian adherents, the size of budget deficit depends on discretionary tax and expenditure
decisions. In their analysis, budget deficit moderates or seeks to terminate recession especially when it is so
severe. Thus, when an economy experiences high unemployment, it increases government responsibility and
associated purchases. This visibly creates markets for business, expands income, and encourages greater
consumption expenditure. The increased size of the markets due to government deficits stimulates the economy
with anticipated higher business profitability and greater investment optimism. All these go to boost private
sector commercial and industrial activities. The neoclassical adherents see structural deficit as the source of
various economic ills, because it persists through various business cycle phases. The general level of government
spending becomes too high for prevailing tax levels in the economy. The very critical negative aspect of budget
deficits is the effect on interest rates which extends to private investments.
As government borrows from the public to finance its expenditure, the increased government demand for credit
puts pressure on interest rates and further crowds out private investments which compete for the same funds. In
the long run, interest rate reduces private capital stock and the high cost of borrowing goes further to slow down
economic growth and undermine standard of living in the future. However, if government uses the funds so
generated at the expense of private borrowing by investing them in strategic economic sectors, the outcome may
reasonably reduce the burden on the future generation. By this position, public sector capital is expected to be
more productive than displaced private sector capital. Deficits may also crowd out domestic exporters where
government borrowing increases domestic interest rates. This makes domestic investment appear more attractive
to foreign investors, thereby leading to capital flows from abroad to the domestic economy. These capital
inflows also bring about increase in demand for the domestic currency (Fourie & Buger, 2000; Beniano, 2003).
Consequently, the highly valued domestic currency empowers domestic consumers to buy foreign goods more
but it makes it more difficult for domestic businesses to sell their products overseas.
The pressure of deficit which directly bears on the government, may in a large magnitude, compel the monetary
authority to monetize the debt, thereby increasing money supply and further fueling inflation. This is common
experience in Nigeria and many other developing countries, where large deficits are contracted by governments
who often default on their debts. Fundamentally, deficit budgets are financed through domestic or external
sources. The domestic sources include funds from the banking system as well as the non-banking public. The
banking system comprises the central (apex) bank and the private banks. The private banks consist of deposit
money banks (DMBs) and merchant/investment banks (MIBs). The financing of budget deficits by the banking
system in Nigeria is regulated by the Central Bank of Nigeria (CBN), which remains the banker to the Nigerian
government. It provides the legal framework for temporary accommodation of government finances in its
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enabling law. The law empowers the CBN to grant ways and means advances to the Federal Government of
Nigeria (FGN) up to 25% of estimated recurrent budget revenue. However, the statutory limit (25%) was
reviewed downwards in 1991 to 12.5% of the estimated recurrent budget revenue. The ways and means being an
overdraft facility is, therefore, provided by to meet the cash flow inadequacies of the federal government, to be
paid back by the end of the same fiscal year.
Private banking institutions equally help to finance the activities of government through purchase of investment
instruments floated in the primary and secondary markets. Domestic borrowing also comes from the non-bank
constituency with the key institutions comprising insurance companies, pension and provident funds, savings and
loan associations, development finance institutions (DFIs), discount houses and individual investors. The
instruments may be in the form of short-term treasury bills in the money market or development stocks/bonds
which are of long-term nature and are tradable in the capital market. However, the ability of government to
source funds from the private sector depends on the sophistication of financial markets in the economy and the
willingness of private investors to hold government bonds. These are the imperatives of government-driven
infrastructure investments which have to do with the dialectics of deficits and operationally define the dynamics
of economic management and administration in the Nigerian nation.
3.
Research Methodology
Data for this study were sourced from the Central bank of Nigeria (CBN) and National Bureau of Statistics.
Econometric methods, including vector auto-regression (VAR) and Augmented Dickey Fuller unit root test, were
employed in data analysis, aided by software package for social sciences (SPSS – Version 15). The endogenous
variable in the research apparatus are gross domestic product, inflation, interest rate, and money supply; while
the exogenous variable is budget deficit (Mpia, 2010; Ogunbunmi, 2011). For analytical purposes, the variables
are designated thus: gross domestic product as GDP, Inflation as INF, Interest rate as INT, money supply as MS,
and budget deficit as BD. The facilitating Multiple Regression Model is:
BD = f (GDP, INF, INT, MS)
BD = a + β1GDP + β2INF + β3INT + β4MS + u
A priori economic expectation is β > 0
Where:a = Intercept; β1 to β4 = Regression coefficients; and u = Stochastic error term.
The relevant time series provided are for 23 years, covering the period 1980 to 2006 as presented in Tables 1 and
2:
Table 1: Fiscal Operations of the Federal Government (N Billion)
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Revenue
12.99
7.51
5.82
6.27
7.27
10.0
7.97
16.13
15.59
25.89
38.15
30.83
53.26
83.49
90.62
249.77
369.27
423.22
353.72
662.59
0.6
0.8
0.72
1.02
1.25
1.66
1.84
Expenditure
14.97
11.41
11.92
9.64
9.93
13.04
16.22
22.02
27.75
41.03
60.27
66.58
92.8
191.22
160.89
248.77
337.22
428.22
487.11
947.69
0.7
1.02
1.02
1.23
1.43
1.82
1.94
Source: CBN and NBS Publications (various years)
21
Surplus/Deficit
-1.98
-3.9
-6.1
-3.36
-2.66
-3.04
-8.25
-5.89
-12.16
-15.13
-22.11
-35.76
-39.53
-107.74
70.27
1.0
32.05
-5.0
-133.39
-285.1
-103.8
-221.0
-301.4
-202.7
172.6
-161.4
-101.3
% of GDP
3.9
-7.7
-11.8
-5.9
-4.2
-4.2
-11.3
-5.4
-8.4
-6.7
-8.5
-11.0
-7.2
-15.5
-7.7
0.1
1.6
-0.2
-4.7
-8.4
-2.9
4.7
5.6
2.9
1.7
-1.5
-0.6
4. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.18, 2013
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Table 2: Nigeria’s GDP at Constant Basic Prices (N Billion)
Year
GDP
Growth Rate (%)
1980
1981
251.05
-26.8
1982
246.73
-1.7
1983
230.38
-6.6
1984
227.25
-1.3
1985
253.01
11.3
1986
257.78
1.8
1987
25.6
-0.7
1988
275.41
7.5
1989
295.09
7.1
1990
472.65
60.1
1991
328.64
-30.5
1992
337.29
2.6
1993
342.54
2.7
1994
345.29
1.3
1995
352.65
2.2
1996
367.22
3.4
1997
377.83
3.8
1998
388.47
2.4
1999
393.11
2.8
2000
412.33
3.3
2001
413.78
5.0
2002
451.79
4.6
2003
495.01
9.6
2004
527.58
6.6
2005
561.93
6.2
2006
594.82
8.9
Source: CBN and NBS Publications (various years)
% ∆ in GDP
26.8
25.1
4.9
5.3
12.6
-9.5
2.5
-8.2
-0.4
53.0
90.6
33.1
0.1
-1.4
0.9
1.2
0.4
-1.4
0.4
0.5
1.7
-0.4
5.0
-3.0
0.4
2.7
4.
Findings & Discussion
The details of comprehensive research hypothesis (CRH) test are presented in Tables 3, 4 and 5:
Table 3: CRH Associating Coefficients (R)
Variables
BD
GDP
INF
INT
MS
BD
1
-0.13
0.26
-0.37
0.14
GDP
-0.13
1
-0.23
0.50
0.88
INF
0.26
-0.23
1
0.09
-0.26
INT
-0.37
0.50
0.87
1
0.17
MS
0.14
0.88
-0.26
0.17
1
Source: Research Data (SPSS-aided)
Table 4: ADF Unit Root Test Results
Statistic
Prob. Value
Critical
Critical
Critical
Lag Length
Values
Values
Values
10%
5%
1%
Variable
GDP
-0.08
0.94
-3.72
-3.00
-2.63
1
INF
-2.62
0.10
3.71
-2.98
-2.63
0
INT
-2.73
0.08
-3.71
-2.98
-2.63
0
MS
-4.26
0.00
-3.79
-3.01
-2.65
5
Source: Research Data (SPSS-aided)
Table 5: CRH Determining Coefficients (R2)
Variables
GDP
INF
INT
MS
With BD
0.85
0.183
0.021
0.966
Source: Research Data (SPSS-aided)
In the Table 3, the results indicate the correlation coefficients relating budget deficit to gross domestic product,
inflation, interest rate and money supply as -0.13, 0.26, -0.37 and 0.14 respectively. This shows that budget
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5. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.18, 2013
www.iiste.org
deficit significantly relates positively with inflation and money supply; but negatively with gross domestic
product and interest rate. The Augmented Dickey Fuller (ADF) unit root test details are presented in Table 4.
Essentially, the statistics and their corresponding probability values affirm overall regression model suitability.
The variations in budget deficits are explained by the dynamics of the determinants, especially gross domestic
product and money supply which recorded coefficient of determination of 0.825 and 0.966, representing 82.5%
and 96.6% potency respectively. The economic a priori expectation, the null comprehensive research hypothesis
is, therefore, rejected. This establishes that budget deficit significantly relates to gross domestic product,
inflation, interest rate and money supply.
The deficits arise as a result of government overbearing public infrastructure investment commitment. The
infrastructure, being development-oriented, relates to roads, water, power, telecommunication, education, and
health care facilities (Central Bank of Nigeria, 2000). With the perpetual feature of deficits in fiscal
management, the dialectics have to do with gross domestic product (GDP), inflation, interest rate and money
supply. GDP remains a primary measure of an economy’s performance, denominated in annual total output of
goods and services. It represents the total market value of all final goods and services produced in a given year.
The determination of GDP in the short-run depends on the behavior of aggregate spending, consumption,
government expenditure and net exports (Lipsey & Chrystal, 2005; Marques, 2004)). With GDP, a monetary
measure is accorded the goods produced within an economy to facilitate meaningful comparative analysis over a
time frame. In the light of this, it assumes a measure of value-added to materials and other inputs in the
production of goods and services by residents and organizations before allowing for depreciation or capital
consumption.
To measure aggregate output more precisely, all goods and services produced in a particular year has to be
counted once, and this captures only the market value of final goods. It excludes intermediate goods since the
value of final goods already represents them. Interest rate represents the price paid to borrow and use funds. It is
the cost of holding money, and the price paid to make people willing to forgo the economies of liquidity.
Consequently, interest rate helps in the mobilization of savings and ensures efficient fiscal allocation in the
promotion of economic growth and development. Interest rate is also used to weigh the activities of the financial
market. It determines supply and demand of loans which invariably affect cost and value of production. Since
economic activity is influenced to a large extent by interest rate, when deficits are financed by borrowing,
interest rates soar. Interest rates also define the direction and magnitude of changes in the market for money
supply, hence the primary concern to economic actors and policy makers. However, several factors influence the
behavior of interest rate in an economy, namely, anticipated inflation and government spending. Government
policy regarding borrowing requirements has direct consequence on the growth of credit. As government
borrowing puts pressure on the demand for credit, interest rates rise, implying increase in the cost of borrowing.
By this, government activity further influences interest rates which in turn increase deficits. As government
borrowing increases deficits, it further raises interest rates which in turn determine the level of government
borrowing. These are the realities of the macroeconomic dialectics, as expansion of government credit leads to
expansion in aggregate credit. The pressure on government borrowing requirement to meet the provision of
goods and services raises interest rates which imply increase in cost of borrowing. As the financial outlay
required for the provision of social goods and services increases, it pressures government into excessive
borrowing and as borrowing puts pressure on demand for credit, cost of borrowing (interest rate) equally
increases. Also, with respect to bonds, the high risk of default is compensated through higher interest payment to
bond holders (Olayide, 2010; Gbosi, 2005; Onoh, 2002). Financing deficits by borrowing, thus, has to do with
interest rates, but where the financing is through taxes and printing of more money, it may not have much to do
with interest rates. Money supply is also a critical macroeconomic variable for consideration in mainstream
deficit dialectics. It relates to the amount of money in circulation, particularly for economic utilization. Since the
stock of money refers to the quantity available in an economy at a point in time, the apex bank constitutes the
major determinant of money stock.
The realities of the economy determine the level of money supply to be expected and the nature of adjustments
to be made from time to time. If funds are generated from the banking system to bridge deficits, especially from
the apex bank, it would have expansion effect on money supply. The financing of such deficits results in
sustained injection of huge amounts of money into the economy which accelerate the growth of money supply.
The financing of government deficits may, therefore, contribute to rapid growth of money supply if well
strategically directed. The effectiveness of regulation of money supply in Nigeria had also been mirrored in the
efficiency government spending and fiscal management (Onoh, 2007; Ilo, 2006; Adam & Bankole, 2000). In
essence, deficits resulting from increase in government participation in the provision of development-oriented
goods and services in Nigeria cause increase in money supply. The huge deficits are usually financed through
ways and means advances from the Central Bank of Nigeria (Adeoye, 2006; Adewuyi, 2000). Growth in
government sector credit then drives growth in aggregate credit, thus making money supply a major component
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6. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.18, 2013
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of macroeconomic dialectics, which clearly reveal the tango of budget deficits and the analytical correlates in the
study.
5.
Conclusion
For so many years, fiscal deficits have become a regular feature of macroeconomic policy in Nigeria over the
years. This tendency also occupies centre stage in economic management deliberations in many other
economies. Ideally, government fiscal operations are strategically designed and directed at stimulating economic
growth. When critical infrastructure is provided and meaningful projects are undertaken, they should ultimately
contribute to economic growth and development. However, in the Nigerian situation, the generation and
application of deficits still leave so much to be desired in terms of the manifest characteristic developmental
outcomes. Government sometimes cuts investment spending only to undermine its capacity to provide and
maintain the needed infrastructure for the much-desired economic growth and development (Gbosi, 2005; Engen
& Hubband, 2004). Where deficits do not analytically relate to gross domestic product, governance may not have
exerted significant influence on overall output and investment in the economy. Essentially, this refers to the
situation where the government funds, which actually occasioned the deficits, were rather largely wasteful
(Gbegi & Orugun, 2009; Adeoye, 2006).
In other instances, government expenditure occasions deficits for the basic reasons for which intervention is neoclassically canvassed in an economy. This position recognizes the many situations where the market mechanism
has failed to produce desirable results; and where many goods which are universally desired are not produced
through free operations of the market. These circumstances compel government to directly engage in the
provision and distribution of such goods and services. The ensuing financing and allied challenges make it
imperative for government to directly assume that role of undertaking infrastructure investment in order to
promote economic growth and development. Considering the huge financial outlay that is required for wellspread infrastructure investments, the private sector which should strategically partner and complement becomes
so reluctant to invest. Moreover, such critical socio-economic areas and focal sectors are perceived as high-risk
and low-return investment outlets. Government, thus, becomes the last resort, as it must take the responsibility of
creating the needed infrastructure for economic growth and development. For oil-rich economies like Nigeria,
the state is presumed to have abundant financial resources and as such is expected to be in a better position to
fund and provide those industrial infrastructure and allied economic goods and services with long gestation
periods. As government expenditure comes to complement private investment, it leaves fiscal deficits in its trail.
With fiscal deficits, government continuous investment in critical economic and social services should
constructively influence the activities of the private sector. By this, the macroeconomic dialectics significantly
intensify growth or expansion of economy (Nsudoh, 2011; Jhingan, 2004).
As growth of public expenditure boosts economic activities, it directly enhances the income of private sector
entities and consequently, the demand for goods and services. It equally leads to increase in price level as
aggregate demand exceeds aggregate supply. Where government finances deficits through borrowing, rising
interest rates influence production activities. Furthermore, the fiscal operations of the government have crucial
implications for money supply in the economy; and changes in gross domestic product are expected to redefine
transaction balances with fresh injection of money into the economy. This also comes along with budget deficits,
as it further enlarges the currency in circulation. All these go to dictate the magnitude and pace of money supply,
interest rates, inflation and GDP, especially in settings like the Nigerian economy where the private sector is not
so developed. Given that open market operation (OMO) in the economy is still undermined by grays of
inefficiency and ineffectiveness, deficit financing is expected to be strategically managed and controlled by the
Central Bank of Nigeria (Garuba, 2010; Onoh, 2007; Laubach, 2003). These scholarly submissions are in tandem
with the analytical outcome that deficits are associated with gross domestic product, inflation, interest rates and
money supply which constitute the key economic aggregates of this study. Where the deficits are truly intended
to financially power the government to achieve the underscored strategic economic growth and development
objectives, it is recommended that:
Infrastructure and socio-economic projects associated with deficits should be well prioritized and
realized to improve the quality of life in the economy;
Macroeconomic correlates of deficits should be closely monitored and expediently redirected to boost
productive activities in the economy; and
Administrative mechanisms should be strengthened to enhance management of government
expenditure, with special reference to strategic sectors of the economy.
With the appropriate checks and balances in place, it is expected that various organs of government will
thoroughly prevent wasteful spending and misapplication of deficits to record meaningful justifiable progress
with the resources of the economy.
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7. Journal of Economics and Sustainable Development
ISSN 2222-1700 (Paper) ISSN 2222-2855 (Online)
Vol.4, No.18, 2013
www.iiste.org
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8. This academic article was published by The International Institute for Science,
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Publishing service based in the U.S. and Europe. The aim of the institute is
Accelerating Global Knowledge Sharing.
More information about the publisher can be found in the IISTE’s homepage:
http://www.iiste.org
CALL FOR JOURNAL PAPERS
The IISTE is currently hosting more than 30 peer-reviewed academic journals and
collaborating with academic institutions around the world. There’s no deadline for
submission. Prospective authors of IISTE journals can find the submission
instruction on the following page: http://www.iiste.org/journals/
The IISTE
editorial team promises to the review and publish all the qualified submissions in a
fast manner. All the journals articles are available online to the readers all over the
world without financial, legal, or technical barriers other than those inseparable from
gaining access to the internet itself. Printed version of the journals is also available
upon request of readers and authors.
MORE RESOURCES
Book publication information: http://www.iiste.org/book/
Recent conferences: http://www.iiste.org/conference/
IISTE Knowledge Sharing Partners
EBSCO, Index Copernicus, Ulrich's Periodicals Directory, JournalTOCS, PKP Open
Archives Harvester, Bielefeld Academic Search Engine, Elektronische
Zeitschriftenbibliothek EZB, Open J-Gate, OCLC WorldCat, Universe Digtial
Library , NewJour, Google Scholar