This research paper examines the relationship between budget deficits and inflation in Nigeria from 1980 to 2009. It uses time series data and the vector error correction mechanism to analyze the correlation between the two macroeconomic variables. The results show there is a significant causal relationship from budget deficits to inflation, but not from inflation to budget deficits, indicating a unidirectional causality. This means budget deficits directly and indirectly affect inflation through increases in the money supply in the Nigerian economy. The paper recommends adequate monetary policy to balance the role of money supply in influencing both budget deficits and inflation, given the unidirectional relationship found between the two variables.
Tax policy, inflation and unemployment in nigeria (1970 – 2008)Alexander Decker
This document summarizes a study examining Nigeria's use of tax policy from 1970 to 2008 to influence macroeconomic indicators like inflation and unemployment. Statistical analysis found that inflation and unemployment rates did not significantly respond to tax policy changes during this period. Periods of lower taxes saw both higher and lower inflation in some years, and unemployment increased steadily in some years regardless of whether taxes were raised or lowered. The inconsistent use of tax measures meant they were not effective at controlling inflation or unemployment. The document reviews economic theory on taxation as a tool for macroeconomic management and outlines Nigeria's various tax policy changes over this period.
Econometric analysis of the effectiveness of fiscal policy in economic growth...Alexander Decker
This document summarizes a study that analyzed the effectiveness of fiscal policy in Nigeria between 1985-2003. It investigated the impact of fiscal policy on GDP, inflation, and balance of payments. The study found that fiscal policy was effective in controlling inflation and balance of payments, as the models explained 75-76% of variations in these variables. However, fiscal policy was not effective in controlling GDP, as the model only explained 48% of GDP variations. The study concluded that government expenditure was not directed towards productive ventures that could increase GDP. It recommended that government redirect spending towards productive sectors and provide tax concessions to infant industries.
This document discusses monetary policy and inflation. It defines inflation and describes its stages from creeping to hyperinflation. It identifies two types of inflation: demand-pull and cost-push. Causes and effects of inflation are explained. The objectives and instruments of monetary policy are outlined, including bank rate, cash reserve ratio, statutory liquidity ratio, open market operations, and others. The role of the State Bank of Pakistan in using these tools to influence money supply, interest rates, and inflation is discussed.
This document discusses fiscal policy, which refers to the government's use of spending and taxation to influence the economy. Fiscal policy works by increasing or decreasing government spending and tax levels, based on theories of British economist John Maynard Keynes. It is used alongside monetary policy to direct a country's economic goals. The document provides examples of how fiscal policy can be used in times of recession by lowering taxes to fuel growth or increasing government spending to create jobs. It also notes that fiscal policy affects different groups disproportionately and must be carefully monitored.
Fiscal Policy and its effects of Economy.Eop Abid Hussain Sindhu, M14BBA036,...564251
Government spending can positively or negatively impact the economy of Pakistan. Productive government spending on sectors like agriculture, industry, education and services can increase productivity, boost living standards, and promote development by creating jobs. However, unproductive spending like large debts and subsidies can reduce resources, hinder productivity and lead to high inflation. Additionally, taxes can negatively impact the economy by reducing productivity, investment, GDP and causing unemployment, poverty and income inequality if not implemented carefully. While foreign aid and loans provide some benefits, they also reduce self-sufficiency and future taxation may be required for repayment. Overall, both government earnings and spending must be balanced and directed towards productive sectors to positively impact Pakistan's economy.
Fiscal policy uses government spending and taxation to influence the economy. It aims to achieve stability without inflation or deflation. The budget estimates revenues and expenditures and is an anti-inflation tool to sustain growth. Revenues come from taxes, fees, loans, etc. and are spent on productive items like infrastructure or non-productive like defense. Fiscal policy can be neutral, expansionary, or contractionary depending on if spending equals, exceeds, or is less than revenues. The objectives are equal wealth distribution, savings, price stability, and economic stability. Limitations include inflexibility, statistics, and decision delays. Islam advocates equal distribution, zakat, and limiting spending imbalances.
The document provides an overview of fiscal policy from both conventional and Islamic perspectives. In the conventional view, fiscal policy uses tools like taxes and government spending to achieve economic goals like growth and stability. It discusses Keynesian, classical, and supply-side economics approaches. In the Islamic view, fiscal policy aims for both material and spiritual prosperity. It examines early Islamic practices like zakat and baitulmal that were used for economic recovery and welfare. The role of government is also to ensure people are protected from weaknesses and greed according to Islamic teachings.
Tax policy, inflation and unemployment in nigeria (1970 – 2008)Alexander Decker
This document summarizes a study examining Nigeria's use of tax policy from 1970 to 2008 to influence macroeconomic indicators like inflation and unemployment. Statistical analysis found that inflation and unemployment rates did not significantly respond to tax policy changes during this period. Periods of lower taxes saw both higher and lower inflation in some years, and unemployment increased steadily in some years regardless of whether taxes were raised or lowered. The inconsistent use of tax measures meant they were not effective at controlling inflation or unemployment. The document reviews economic theory on taxation as a tool for macroeconomic management and outlines Nigeria's various tax policy changes over this period.
Econometric analysis of the effectiveness of fiscal policy in economic growth...Alexander Decker
This document summarizes a study that analyzed the effectiveness of fiscal policy in Nigeria between 1985-2003. It investigated the impact of fiscal policy on GDP, inflation, and balance of payments. The study found that fiscal policy was effective in controlling inflation and balance of payments, as the models explained 75-76% of variations in these variables. However, fiscal policy was not effective in controlling GDP, as the model only explained 48% of GDP variations. The study concluded that government expenditure was not directed towards productive ventures that could increase GDP. It recommended that government redirect spending towards productive sectors and provide tax concessions to infant industries.
This document discusses monetary policy and inflation. It defines inflation and describes its stages from creeping to hyperinflation. It identifies two types of inflation: demand-pull and cost-push. Causes and effects of inflation are explained. The objectives and instruments of monetary policy are outlined, including bank rate, cash reserve ratio, statutory liquidity ratio, open market operations, and others. The role of the State Bank of Pakistan in using these tools to influence money supply, interest rates, and inflation is discussed.
This document discusses fiscal policy, which refers to the government's use of spending and taxation to influence the economy. Fiscal policy works by increasing or decreasing government spending and tax levels, based on theories of British economist John Maynard Keynes. It is used alongside monetary policy to direct a country's economic goals. The document provides examples of how fiscal policy can be used in times of recession by lowering taxes to fuel growth or increasing government spending to create jobs. It also notes that fiscal policy affects different groups disproportionately and must be carefully monitored.
Fiscal Policy and its effects of Economy.Eop Abid Hussain Sindhu, M14BBA036,...564251
Government spending can positively or negatively impact the economy of Pakistan. Productive government spending on sectors like agriculture, industry, education and services can increase productivity, boost living standards, and promote development by creating jobs. However, unproductive spending like large debts and subsidies can reduce resources, hinder productivity and lead to high inflation. Additionally, taxes can negatively impact the economy by reducing productivity, investment, GDP and causing unemployment, poverty and income inequality if not implemented carefully. While foreign aid and loans provide some benefits, they also reduce self-sufficiency and future taxation may be required for repayment. Overall, both government earnings and spending must be balanced and directed towards productive sectors to positively impact Pakistan's economy.
Fiscal policy uses government spending and taxation to influence the economy. It aims to achieve stability without inflation or deflation. The budget estimates revenues and expenditures and is an anti-inflation tool to sustain growth. Revenues come from taxes, fees, loans, etc. and are spent on productive items like infrastructure or non-productive like defense. Fiscal policy can be neutral, expansionary, or contractionary depending on if spending equals, exceeds, or is less than revenues. The objectives are equal wealth distribution, savings, price stability, and economic stability. Limitations include inflexibility, statistics, and decision delays. Islam advocates equal distribution, zakat, and limiting spending imbalances.
The document provides an overview of fiscal policy from both conventional and Islamic perspectives. In the conventional view, fiscal policy uses tools like taxes and government spending to achieve economic goals like growth and stability. It discusses Keynesian, classical, and supply-side economics approaches. In the Islamic view, fiscal policy aims for both material and spiritual prosperity. It examines early Islamic practices like zakat and baitulmal that were used for economic recovery and welfare. The role of government is also to ensure people are protected from weaknesses and greed according to Islamic teachings.
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.
1. This chapter discusses fiscal policy as a tool for stabilizing the economy through manipulating government spending and taxes.
2. It explores discretionary and automatic fiscal adjustments using the AD-AS model and covers problems like recognition lags that complicate fiscal policy effectiveness.
3. Evaluating fiscal policy involves examining standardized budgets that adjust for cyclical factors to determine if policy is expansionary or contractionary.
The document summarizes 4 research papers on fiscal policy. Paper 1 discusses identifying fiscal policy shocks using VAR and finds tax cuts are more stimulative than spending increases. Paper 2 analyzes fiscal adjustments and finds spending cuts are more effective than tax increases. Paper 3 finds distortionary taxes reduce growth while productive spending enhances growth. Paper 4 examines how fiscal multipliers vary over the business cycle, finding they are larger in downturns and limited in upturns.
Fiscal policy is the means by which governments adjust taxes and spending to influence economic growth and stability. This document discusses several aspects of fiscal policy, including its objectives like mobilizing resources, accelerating growth, and providing economic infrastructure. It also discusses discretionary fiscal policy where governments deliberately manipulate taxes and spending to achieve goals like employment and price stability. The document provides definitions of fiscal policy, examples of expansionary and contractionary fiscal policy, and questions related to the topic.
The impact of inflation, policy rate and government consumption expenditure o...Alexander Decker
This document analyzes the impact of inflation, policy rate, and government consumption expenditure on GDP growth in Ghana from 1980-2010 using time series econometric analysis. The results show:
1) There is a positive long-run relationship between inflation and GDP growth as well as between the policy rate and GDP growth. However, government consumption expenditure has a negative long-run impact on GDP growth.
2) In the short-run, inflation and government consumption expenditure positively impact GDP growth, while the policy rate has an inverse relationship with GDP growth.
3) Of the three variables, only inflation has a statistically significant impact on real GDP growth in Ghana. The study recommends prudent monetary and fiscal policies aimed at stabil
Using time series data, this study investigated the effect of aggregated and disaggregated public spending on economic growth in Nigeria during the period 1980 – 2015. Time series data such as aggregated expenditure proxy by total federal government expenditure (TFGE), disaggregated expenditure proxy by recurrent expenditure (REXP) and capital expenditure (CEXP,) and economic growth proxy by GDP were obtained from central bank of Nigeria (CBN) statistical bulletin. Error Correction Model (ECM) was used to estimate the model. The result of the finding revealed that the total federal government expenditure (TFGE) and capital expenditure (CEXP) exerts positive and significant influences on GDP while recurrent expenditure (REXP) has a positive and insignificant influence on GDP. This implies that the higher the public spending, the higher the GDP. The researchers therefore, recommend that for sustainable Economic Growth (GDP), federal government should increase capital expenditure by allocating more funds to the productive sector of the economy. More so, the positive contributions of public spending to economic growth necessitate the continued use of fiscal policy instruments to pursue macroeconomic objectives in Nigeria.
This document discusses key aspects of fiscal policy in India. It defines fiscal policy as the government's approach to taxation, spending, and borrowing to achieve economic objectives like growth. The main objectives of fiscal policy are promoting growth, stabilizing the economy during recessions and booms, creating jobs, and redistributing income. It describes countercyclical fiscal policy, which aims to counter economic cycles through tax and spending adjustments. It also discusses concepts like the revenue budget, capital budget, budget deficits, and deficit financing.
This document summarizes key economic indicators in Mexico from 1980 to 2013. It discusses Mexico's GDP, which grew from $637 billion in 1980 to $1.334 trillion in 2008. It also discusses Mexico's gross national product, interest rates, inflation rates, stock market performance, and unemployment rates over this period. Several economic crises and reforms are mentioned as influencing these indicators, including the debt crisis of 1982, NAFTA agreements, and the global financial crisis of 2009.
Fiscal policy uses government spending and tax collection to influence macroeconomic conditions like unemployment, inflation, and interest rates. There are two types of fiscal policy: expansionary and contractionary. Expansionary policy involves increasing spending or lowering taxes to boost aggregate demand during recessions. Contractionary policy does the opposite by raising taxes or lowering spending to reduce inflationary pressures in overheating economies. However, fiscal policy can disproportionately impact some groups over others.
This document discusses fiscal policy and its role in stabilizing the economy. It covers several key points:
1) Fiscal policy involves manipulating taxes and government spending to influence output, employment, and inflation. The government can use expansionary policy to boost aggregate demand during recessions or contractionary policy to reduce demand and inflation.
2) Models show how changes in spending and taxes shift the aggregate demand curve. Expansionary policy leads to higher output and deficit spending, while contractionary policy lowers prices but maintains full employment.
3) Problems with fiscal policy include recognition lags, other government goals conflicting with stabilization, and political business cycles that pursue expansion in election years regardless of economic conditions.
Fiscal policy refers to a government's spending and tax policies. It aims to stabilize economic growth and avoid booms and busts. Fiscal policy tools include government spending, taxation, and borrowing. Governments use these tools to influence aggregate demand and influence goals like economic growth, inflation, and unemployment. Fiscal policy plays a crucial role in mobilizing resources, boosting employment and development, and stabilizing an economy.
Fiscal policy involves changes to government spending and taxes to influence the economy. The document discusses the types of fiscal policy including expansionary, contractionary, and neutral fiscal policy. Expansionary policy involves increasing spending or decreasing taxes to increase money supply, while contractionary policy does the opposite to reduce money supply and inflation. Fiscal policy aims to achieve long-run growth, full employment and lower prices. However, it faces criticisms like time lags in its effects and potential for increasing budget deficits. The document also examines concepts like the Laffer curve and effects of fiscal policy on unemployment, expansion, and inflation.
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.
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.
Fiscal policy uses government spending and taxation to influence macroeconomic variables like employment, inflation and economic growth. It has both discretionary and automatic components. The objectives of fiscal policy include achieving desirable price levels, consumption levels, employment levels, income distribution, and capital formation. Fiscal policy instruments include public expenditure, taxes, and public debt. The government can use these tools to stimulate or contract the economy during inflationary or deflationary periods.
This document summarizes a training session on macroeconomics. It begins with an introduction and overview of the session structure. It then covers key macroeconomic concepts including aggregate supply and demand, the business cycle, inflation and its measurement, monetary and fiscal policy responses. Sections also discuss the current state of the Indian economy, including GDP growth, trade trends, and recent fiscal measures. The session concludes with an interview question section and open discussion.
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.
Analysis of the relationship between fiscal deficits and external sector perf...Alexander Decker
This document summarizes a study that examined the relationship between fiscal deficits and external sector performance in Nigeria from 1961 to 2011. The study used bi-variate granger causality and error correction modeling techniques to analyze data on fiscal deficits, external reserves, exchange rates, and other variables collected from Central Bank of Nigeria publications. The results showed a long-run relationship between the variables. There was also evidence of bi-directional causality between budget deficits and external performance in the long-run, and unidirectional causation from external performance to deficits in the short-run. Fiscal deficits did not significantly impact external performance in the short-run. Cross-correlation showed deficits could lead to long-run deterioration in reserves and exchange
Impact of macroeconomic variables on government budget deficit in nigeriaAlexander Decker
This document examines the relationship between macroeconomic variables and government budget deficits in Nigeria from 1981 to 2010. It finds that real GDP, inflation, exchange rate, interest rate, government budget deficit, and gross investment are cointegrated, indicating a long-run relationship. However, there is no statistical significance between budget deficits and economic growth in Nigeria. The paper recommends improving economic and political institutions to enhance policymaking, fully implementing fiscal responsibility acts to reduce leakage, and decreasing corruption to achieve fiscal responsibility.
An evaluation of economic strategies in budget deficit reduction in kenyaAlexander Decker
This document evaluates economic strategies to reduce budget deficits in Kenya. It discusses how budget deficits have negatively impacted developing countries through high inflation, increased debt, and reduced sovereignty. The Kenyan government has struggled with persistent budget deficits despite attempts to widen the tax base and implement austerity measures to cut spending. The study aims to evaluate additional economic strategies, such as tax policy reforms, controlling inflation, increasing technology innovation, and managing government expenditures, that could help Kenya reduce its budget deficits.
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.
1. This chapter discusses fiscal policy as a tool for stabilizing the economy through manipulating government spending and taxes.
2. It explores discretionary and automatic fiscal adjustments using the AD-AS model and covers problems like recognition lags that complicate fiscal policy effectiveness.
3. Evaluating fiscal policy involves examining standardized budgets that adjust for cyclical factors to determine if policy is expansionary or contractionary.
The document summarizes 4 research papers on fiscal policy. Paper 1 discusses identifying fiscal policy shocks using VAR and finds tax cuts are more stimulative than spending increases. Paper 2 analyzes fiscal adjustments and finds spending cuts are more effective than tax increases. Paper 3 finds distortionary taxes reduce growth while productive spending enhances growth. Paper 4 examines how fiscal multipliers vary over the business cycle, finding they are larger in downturns and limited in upturns.
Fiscal policy is the means by which governments adjust taxes and spending to influence economic growth and stability. This document discusses several aspects of fiscal policy, including its objectives like mobilizing resources, accelerating growth, and providing economic infrastructure. It also discusses discretionary fiscal policy where governments deliberately manipulate taxes and spending to achieve goals like employment and price stability. The document provides definitions of fiscal policy, examples of expansionary and contractionary fiscal policy, and questions related to the topic.
The impact of inflation, policy rate and government consumption expenditure o...Alexander Decker
This document analyzes the impact of inflation, policy rate, and government consumption expenditure on GDP growth in Ghana from 1980-2010 using time series econometric analysis. The results show:
1) There is a positive long-run relationship between inflation and GDP growth as well as between the policy rate and GDP growth. However, government consumption expenditure has a negative long-run impact on GDP growth.
2) In the short-run, inflation and government consumption expenditure positively impact GDP growth, while the policy rate has an inverse relationship with GDP growth.
3) Of the three variables, only inflation has a statistically significant impact on real GDP growth in Ghana. The study recommends prudent monetary and fiscal policies aimed at stabil
Using time series data, this study investigated the effect of aggregated and disaggregated public spending on economic growth in Nigeria during the period 1980 – 2015. Time series data such as aggregated expenditure proxy by total federal government expenditure (TFGE), disaggregated expenditure proxy by recurrent expenditure (REXP) and capital expenditure (CEXP,) and economic growth proxy by GDP were obtained from central bank of Nigeria (CBN) statistical bulletin. Error Correction Model (ECM) was used to estimate the model. The result of the finding revealed that the total federal government expenditure (TFGE) and capital expenditure (CEXP) exerts positive and significant influences on GDP while recurrent expenditure (REXP) has a positive and insignificant influence on GDP. This implies that the higher the public spending, the higher the GDP. The researchers therefore, recommend that for sustainable Economic Growth (GDP), federal government should increase capital expenditure by allocating more funds to the productive sector of the economy. More so, the positive contributions of public spending to economic growth necessitate the continued use of fiscal policy instruments to pursue macroeconomic objectives in Nigeria.
This document discusses key aspects of fiscal policy in India. It defines fiscal policy as the government's approach to taxation, spending, and borrowing to achieve economic objectives like growth. The main objectives of fiscal policy are promoting growth, stabilizing the economy during recessions and booms, creating jobs, and redistributing income. It describes countercyclical fiscal policy, which aims to counter economic cycles through tax and spending adjustments. It also discusses concepts like the revenue budget, capital budget, budget deficits, and deficit financing.
This document summarizes key economic indicators in Mexico from 1980 to 2013. It discusses Mexico's GDP, which grew from $637 billion in 1980 to $1.334 trillion in 2008. It also discusses Mexico's gross national product, interest rates, inflation rates, stock market performance, and unemployment rates over this period. Several economic crises and reforms are mentioned as influencing these indicators, including the debt crisis of 1982, NAFTA agreements, and the global financial crisis of 2009.
Fiscal policy uses government spending and tax collection to influence macroeconomic conditions like unemployment, inflation, and interest rates. There are two types of fiscal policy: expansionary and contractionary. Expansionary policy involves increasing spending or lowering taxes to boost aggregate demand during recessions. Contractionary policy does the opposite by raising taxes or lowering spending to reduce inflationary pressures in overheating economies. However, fiscal policy can disproportionately impact some groups over others.
This document discusses fiscal policy and its role in stabilizing the economy. It covers several key points:
1) Fiscal policy involves manipulating taxes and government spending to influence output, employment, and inflation. The government can use expansionary policy to boost aggregate demand during recessions or contractionary policy to reduce demand and inflation.
2) Models show how changes in spending and taxes shift the aggregate demand curve. Expansionary policy leads to higher output and deficit spending, while contractionary policy lowers prices but maintains full employment.
3) Problems with fiscal policy include recognition lags, other government goals conflicting with stabilization, and political business cycles that pursue expansion in election years regardless of economic conditions.
Fiscal policy refers to a government's spending and tax policies. It aims to stabilize economic growth and avoid booms and busts. Fiscal policy tools include government spending, taxation, and borrowing. Governments use these tools to influence aggregate demand and influence goals like economic growth, inflation, and unemployment. Fiscal policy plays a crucial role in mobilizing resources, boosting employment and development, and stabilizing an economy.
Fiscal policy involves changes to government spending and taxes to influence the economy. The document discusses the types of fiscal policy including expansionary, contractionary, and neutral fiscal policy. Expansionary policy involves increasing spending or decreasing taxes to increase money supply, while contractionary policy does the opposite to reduce money supply and inflation. Fiscal policy aims to achieve long-run growth, full employment and lower prices. However, it faces criticisms like time lags in its effects and potential for increasing budget deficits. The document also examines concepts like the Laffer curve and effects of fiscal policy on unemployment, expansion, and inflation.
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.
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.
Fiscal policy uses government spending and taxation to influence macroeconomic variables like employment, inflation and economic growth. It has both discretionary and automatic components. The objectives of fiscal policy include achieving desirable price levels, consumption levels, employment levels, income distribution, and capital formation. Fiscal policy instruments include public expenditure, taxes, and public debt. The government can use these tools to stimulate or contract the economy during inflationary or deflationary periods.
This document summarizes a training session on macroeconomics. It begins with an introduction and overview of the session structure. It then covers key macroeconomic concepts including aggregate supply and demand, the business cycle, inflation and its measurement, monetary and fiscal policy responses. Sections also discuss the current state of the Indian economy, including GDP growth, trade trends, and recent fiscal measures. The session concludes with an interview question section and open discussion.
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.
Analysis of the relationship between fiscal deficits and external sector perf...Alexander Decker
This document summarizes a study that examined the relationship between fiscal deficits and external sector performance in Nigeria from 1961 to 2011. The study used bi-variate granger causality and error correction modeling techniques to analyze data on fiscal deficits, external reserves, exchange rates, and other variables collected from Central Bank of Nigeria publications. The results showed a long-run relationship between the variables. There was also evidence of bi-directional causality between budget deficits and external performance in the long-run, and unidirectional causation from external performance to deficits in the short-run. Fiscal deficits did not significantly impact external performance in the short-run. Cross-correlation showed deficits could lead to long-run deterioration in reserves and exchange
Impact of macroeconomic variables on government budget deficit in nigeriaAlexander Decker
This document examines the relationship between macroeconomic variables and government budget deficits in Nigeria from 1981 to 2010. It finds that real GDP, inflation, exchange rate, interest rate, government budget deficit, and gross investment are cointegrated, indicating a long-run relationship. However, there is no statistical significance between budget deficits and economic growth in Nigeria. The paper recommends improving economic and political institutions to enhance policymaking, fully implementing fiscal responsibility acts to reduce leakage, and decreasing corruption to achieve fiscal responsibility.
An evaluation of economic strategies in budget deficit reduction in kenyaAlexander Decker
This document evaluates economic strategies to reduce budget deficits in Kenya. It discusses how budget deficits have negatively impacted developing countries through high inflation, increased debt, and reduced sovereignty. The Kenyan government has struggled with persistent budget deficits despite attempts to widen the tax base and implement austerity measures to cut spending. The study aims to evaluate additional economic strategies, such as tax policy reforms, controlling inflation, increasing technology innovation, and managing government expenditures, that could help Kenya reduce its budget deficits.
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
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
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)>
This study examines the relationship between fiscal deficit and inflation in India between 1970-71 and 2011-12. It finds that inflation is not caused by fiscal deficit, and that major factors driving deficit are the global recession, government expenditure, inefficient social programs, and money supply. The paper reviews literature on the relationship between budget deficits, money supply, growth, and inflation. It analyzes the data on fiscal deficit, inflation, money supply, and government expenditure. The conclusion is that government action is needed to boost investment, fiscal consolidation, education, and inclusive growth to address India's economic challenges.
Dynamic Impact of Money Supply on Inflation: Evidence from ECOWAS Member Statesiosrjce
According to the monetarists, inflation is essentially a monetary phenomenon in the sense that a
continuous rise in the general price level is due to the rate of expansion in money supply far in excess of the
money actually demanded by economic units. But the link between changes in money supply and inflation is not
instantaneous. This study, therefore, assessed this dynamic linkage between money supply and inflation in
ECOWAS member states; West African Monetary Zone (WAMZ) and West African Economic Monetary Union
(WAEMU) for the period 1980-2012. The stationary properties of the series are explored both at univariate and
panel sense using KPSS and ADF; IPS and LLC. The results revealed that money supply and inflation are
stationary at the level for individual countries and at panel sense. The random effect model for ECOWAS
member states shows that the impact of money supply on inflation is effective in the current and first period.
While the impact is effective in the first period for WAMZ, WAEMU experiences the impact in current period.
The finding also reveals that there are significant specific-country effects on the variables. This implies that the
objective of macroeconomic convergence is yet to be achieved. The paper, therefore recommends that inflation
should be used as an operational guide in evaluating the effectiveness of monetary policy and also a strong
monetary cooperation programme among ECOWAS member states should be evolved.
Dynamics of inflation and financial development empirical evidence from ghanaAlexander Decker
This document summarizes a study that examines the dynamic link between inflation and financial development in Ghana from 1964-2012. The study uses various econometric techniques to analyze the relationship between inflation and two measures of financial development: M2/GDP and private credit/GDP. The study finds a dual negative relationship between inflation and financial development in the short-run, while finding a unidirectional negative effect of inflation on financial development in the long-run. Specifically, inflation had a stronger dampening effect on private credit/GDP than M2/GDP, and the negative impact of financial development on inflation came primarily from private credit/GDP. The study was motivated by mixed theoretical views on the relationship and inconclusive
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tenets of the twin-deficit hypothesis, the Ricardian equivalence hypothesis, the current account targeting
hypothesis, or the feedback linkages. It also evaluates the effects of budget and trade deficits on economic growth.
On a global perspective, these have been in the recent period debated in developed and developing nations. In
contributing to this ongoing debate, the study applied unit root tests, cointegration analysis, a dynamic vector
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annual time series data for Kenya from 1980 to 2016. There is evidence of unidirectional causality running from
budget deficit to external deficit in support of the twin-deficit hypothesis. In the long run, budget deficit had
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findings suggest that the authorities should promote policies that upscale fiscal discipline, curb budget deficits for
external stability and long-term economic growth, in Kenya. The evidence underscores the need for more country
specific studies in sub-Saharan Africa.
Does government spending spur economic growth evidence from nigeriaAlexander Decker
- The document examines the impact of government spending on economic growth in Nigeria using annual time series data from 1970 to 2010.
- The results show that at the aggregate level, government spending in Nigeria has a small positive impact on growth (0.16%), but at the disaggregated level only recurrent spending significantly and positively impacts growth while capital spending has a negative and insignificant effect.
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11.exchange rate and macroeconomic aggregates in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of exchange rates on macroeconomic aggregates in Nigeria from 1970 to 2009. It uses simultaneous equation models and vector-autoregressive models to examine the relationship between real exchange rates and GDP growth. The results show no strong direct relationship between exchange rate changes and GDP growth. Rather, Nigeria's economic growth has been directly affected by fiscal and monetary policies and exports. Exchange rate overvaluation has been unfavorable for growth. The conclusion is that exchange rate management improvements are necessary but not sufficient to revive the Nigerian economy and broader economic reforms are required.
Exchange rate and macroeconomic aggregates in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of exchange rates on macroeconomic aggregates in Nigeria from 1970 to 2009. Using simultaneous equation models and vector-autoregressive models, the study finds no strong direct relationship between exchange rate changes and GDP growth in Nigeria. Rather, economic growth has been directly affected by fiscal and monetary policies and exports, which have sustained an overvalued exchange rate that has been unfavorable for growth. The conclusion is that improving exchange rate management is necessary but not sufficient to revive the Nigerian economy, and a broader program of economic reforms is required, including complementary restrictive monetary policy.
The impact of interest rates on the development of an emerging market empiric...Alexander Decker
This document summarizes a journal article about the impact of interest rates on the development of emerging markets, using Nigeria as an empirical case study. It acknowledges people who assisted with the research. The abstract indicates that interest rates are difficult to forecast and impact borrowing costs for businesses. While higher rates could encourage savings in the long-run, current high rates in Nigeria of 12% are negatively impacting growth. The literature review discusses how inflation can stimulate or deter human capital formation and how interest rates influence savings, investment, and financial intermediation. It recommends Nigeria adopt pragmatic policies to reduce lending rates to single digits to boost the economy.
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The nexus between budget deficit and inflation in the nigerian
1. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 10, 2012
The Nexus between Budget Deficit and Inflation in the Nigerian
Economy (1980 – 2009)
Abel Ariyo Awe (Ph.D)1* Olalere Sunday Shina2
1. Department of Economics Ekiti State University Ado-Ekiti, Ekiti State Nigeria
2. Department of economics Ekiti State University Ado-Ekiti, Ekiti State Nigeria
*aweabelariyo@yahoo.com
Abstract
This study examined whether budget deficit is inflationary or not in Nigeria within the period of
1980-2009. The study made use of time series data and employed vector Error correction
Mechanism (VECM) to determine the correlation that existed between the two macroeconomic
variables. The study also investigated the existence of long run relationship between budget
deficit and inflation. The result showed a significant causal relationship from budget deficit to
inflation while the causal relationship from inflation to budget deficit was insignificant. This
implies that a uni-directional causality from budget deficit to inflation exist in Nigeria. This result
shows that budgets deficit affect inflation directly and indirectly through increase in money
supply in the Nigerian economy. Adequate monetary policy should be geared towards balancing
the role money supply performs to both budget deficit and inflation, noting that there was uni-
directional relationship between budget deficit and inflation.
Keywords: Budget Deficit, Inflation, Causality, Nexus
1. Introduction
The persistent growth of budget deficit in developing countries in recent time has brought the
issue of fiscal deficit into focus. While by definition, inflation is a persistence and appreciable
rise in the general price level, however, not every increase in price level is termed inflation.
Therefore, for an increase in general price level to be considered inflation, such a rise must be
constant, enduring and sustained. For inflation to occur, the price level should affect almost every
commodity and should not be temporal. In inflationary economy, it is difficult for money to act
as a medium of exchange and store of value without adverse effects on output, employment and
real income.
The development of a budget deficit is often traced to the Keynesian inspired expenditure-led
growth theory of the 1930s. Most countries of the world adopted this theory that government has
to motivate the aggregate demand side of the economy in order to stimulate economic growth.
In Nigeria, government expenditure has consistently exceeded its revenue for most of the years
beginning from 1980 except in 1995 and 1996 when surplus budget were recorded. Some of the
increases in the deficits have been associated with declining tax revenue resulting from the
recession, others relate to the increase in debt service payments on public debt. While budget
deficits are nothing new in Nigeria’s history, the recent size of the deficit has been a cause of
concern to many people including academics, policy makers and investors.
The persistent government budget deficits and government debt have become major concern in
both developed and developing countries. According to Olomola and Olagunju (2004), the
consequencies of budget deficit on macroeconomic variables cannot be underestimated in most
countries of the world, Nigeria inclusive.
Over the years, there has been a persistent rise in private consumption. Government expenditures
and developments in the external sector have also impacted strongly on the budget deficit.
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ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 10, 2012
However, this has effects on macroeconomic variables such as interest rate, exchange rate,
inflation, consumption, investment, and so on which serve as medium through which budget
deficit affects economic growth. Most analysts therefore argued that deficit reduction is crucial to
the future growth of an economy, although, economists are divided over its impacts. It is
expected that lower budget deficits will lower real interest rates, increase investment, and thereby
increase productivity growth and real income (Cebula, 2000).
The issue of deficits and deficit financing, therefore, has been of primary concern to the
government because deficit are perceived as negative traits in the economy. Contrarily, budget
deficits can sometimes be good for an economy because real structural deficits can usher in great
growth in output, consumption, encourages savings and investment as well as enhanced
productivity and purchasing power in an economy, thereby stimulate economic activities.
Deficit reduction/financing is done via borrowing mainly and taxation sometimes, which are both
inflationary. Inflation is one of the numerous problems of developing nations which needs to be
regulated. The rate of inflation has been on increase with its damaging effect on the economy
through the movement of price of consumer’s goods and services.
In the literature, there are controversies on whether budget deficit is inflationary or not. Some
researchers argued that budget deficit is inflationary and these researchers include Fakiyesi
(1996), Iyoha (2000), Vieira (2000), Obadan (2001), Ghartey (2001), Arikawe (2002), Nechega
(2005), Lozano (2008), Oladipo and Akinbobola (2011), Imimole and Enoma (2011). While
some other researchers such as Karras (1994), DeHaan and Zelhorst (2001), Aliyu and Englame
(2009), WAMA (2009), Vansteenkiste (2009), and so on, were of the opinion that budget deficit
is not inflationary.
Ogunmuyiwa (2008) argued that, there is unidirectional causality between budget deficit and
inflation in Nigeria. The result of his study shows that, the causality runs from inflation to budget
deficit in Nigeria. This implies that, inflation causes budget deficit in Nigeria.
Chimobi and Igwe (2002) established that, there is bilateral/feedback causality between budget
deficit and inflation in Nigeria. They argued that, changes in inflation could be explained by
previous inflation and the value of past budget deficit. Also, changes that occur in budget deficit
could be explained by the past budget deficit and the value of past inflation.
However, the views of Ogunmuyiwa (2008), Aliyu and Englame (2009), WAMA (2009) were in
sharp contrast to the monetarists like Iyoha (2000), Obadan (2001), Oladipo and Akinbobola
(2011) among others who were of the opinion that budget deficit is inflationary in Nigeria.
Considering these views, it is obvious that some scholars believe budget deficit causes inflation
while some viewed otherwise.
Consequently, this study focuses on analyzing empirically the nexus between budget deficit and
inflation. It provides an avenue for more critical appraisal of the direction of causality by the
inclusion of government debt variable which was missing in all the past studies.
2. Literature Review
It is generally believed that budget deficit is one of the core instruments in the hand of
government for the attainment of sustainable economic growth target. The issues on the nexus
between budget deficit and inflation and their impacts on the economy have been explored by
many researchers across different regions in the world while some of these researches dwell
basically on Nigeria.
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ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 10, 2012
The inflationary effects of a budget deficit have been the object of extensive empirical evaluation
at international level with mixed results. There are some studies that found significant
relationship between budget deficit, money growth and inflation while some found no significant
relationship among the variables.
Karras (1994) investigated the impact of budget deficit on money growth, inflation investment
and real output for a wider sample of 32 countries, including developed and developing
economies. He used annual data between 1950 and 1989, to estimate reduced-form equations and
found among other things that (i) deficits are generally not monetised and therefore do not
produce inflation via monetary expansion; and (ii) deficits are not inflationary, even by virtue of
their aggregate demand deficits. Tekin-Koru and Ozmen (2003) used a vector error correction
model. The result of their research shows, in the long-run that inflation is positively related to the
money supply and exchange rate but inflation was found to be negatively related to the real
income in Turkey. For the same country, Ozatay (2000) found the price level has been adjusted to
the monetary imbalances caused by the Turkish government’s fiscal imbalances.
Ghartey (2001) found fiscal deficit to be inflationary in Ghana between the periods of 1972 to
1992, because substantial amount of financing budget deficit came from printing money. He
concluded that budget deficit monetisation generated inflationary pressures, which created, in
turn, an adverse environment for economic growth.
Nechega (2005) assessed the Fiscal Dominance (FD) hypothesis in Democratic Republic of
Congo between the periods 1981 to 2003, using a co-integration analysis. His empirical findings
reveal a strong and statistically significant long-term relationship between fiscal deficit and
money growth and between money creation and inflation. This supports the assumption that the
fiscal dominance hypothesis applies throughout the period.
Lozano (2008) using Johanse co-integration and vector error correction (VEC) model in
Colombia for the period of 25 years (1982 – 2007). He noted that, a causal long term relationship
between budget deficit, money growth and inflation could vary depending on the degree of
independence of the Central bank and the type of monetary policy regime.
Vansteekiste (2009) employed pooled probit analysis to estimate the contribution of the key
factors to inflation start in 91 countries of which 63 were developing countries and 28 are
advanced economies. The empirical results suggest that, for all cases considered, a more fixed
exchange rate regime and lower real policy rates increase the probability of an inflation start. For
developing countries, other relevant factors included food price inflation, the degree of trade
openness, the level of past inflation, the ratio of external debt to GDP and the durability of the
political regime.
The effect of budget deficit on inflation in Nigeria and its impact on the Nigerian economy
cannot be overemphasized according to the studies carried out by the early researchers which
include Onwioduokit (1999), Chimobi and Igwe (2010), Imimole and Enoma (2011) and Oladipo
and Akinbobola (2011).
Onwioduokit (1999) in his study attempted to ascertain the impact of fiscal deficits on inflation
as well as the impact of inflation on fiscal deficits. In essence, the study sought to answer the
question, ‘Do fiscal deficit cause inflation or is it inflation that cause fiscal deficits? Using
Granger-causality test, the study confirmed that fiscal deficit as well as fiscal deficit-Gross
Domestic Product (GDP) ratio caused inflation in Nigeria. However, the empirical results did not
confirm a feedback effect between inflation and deficit in absolute terms. In the same vain,
Patillo, Poirson and Ricci (2004) confirmed this by arguing that, low deficit levels are essential in
order for developing countries to finance infrastructural development and education. In a study
carried out in some developing countries (including Nigeria), there was an evidence that there
exists a positive relationship between budget deficit and inflation.
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ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 10, 2012
Nyong and Odubekun (2002) examine the effects of monetary financing of budget deficit on
macroeconomic instability in Nigeria, using the following variables in their methodology,
inflation, gross domestic product, money supply and exchange rate. They found that monetary
financing of fiscal deficit is one of the contributing factors to macroeconomic instability in
Nigeria. Specifically, the result of the empirical study reveal that 10 percent increase in monetary
financing of the deficit may lead to 5.5 percent increase in inflation. They quantified the cost to
the economy, the monetary financing of fiscal deficit in terms of inflation, economic growth,
capital flight, exchange rate depreciation, and balance of payment deficit; these were found to be
high. According to Nyong and Odubekun (2002), the continuous financing of bulging fiscal
deficit in Nigeria by the CBN is partly responsible for liquidity in the money market and inflation
in the goods market.
However, West Africa Monetary Agency (WAMA) (2009) analyzed the relationship between
money supply growth and inflation in each of the member countries. The results indicate that the
relationship between money supply growth and inflation depends on the peculiar circumstances
of the countries concerned. Inflation exhibited a positive relationship with money supply in Benin,
Guinea-Bissua, Mali, Gambia, Ghana, Guinea, Cape Verde and Liberia. Thus, in these countries,
monetary policy contributed to movements in the general price level. On the other hand, the
relationship was negative in Senegal, Togo, Nigeria, Burkina-Faso, Cote d’voire, Niger and
Sierea-Leone. The negative correlations observed in certain countries confirm the existence of
other determinants of inflation which may be structural in nature or attributed to supply-side-
factors. Aliyu and Englama (2009) confirm this by employing Vector Autoregressive (VAR)
model and Granger causality test on selected monetary policy and other macroeconomic variables
to explore the various channels. The results from the model show that inflation in Nigeria shows
no sign of effect to monetary transmission. Specifically, weak relationship between price, credit
and interest rate channels were established. However, evidence of strong inverse link between
exchange rate and price was found in the model. This suggests that exchange rate pass-through
the level of price in economy.
Oladipo and Akinbobola (2011) used Granger causality pair-wise test in determining the causal
relationship between budget deficit and inflation. The results showed that there was no causal
relationship from inflation to budget deficit, while the causal relationship from budget deficit to
inflation exists in Nigeria. Furthermore, the result showed that budget deficit affects inflation
directly and indirectly through fluctuations in exchange rate in the Nigerian economy. Also,
Chimobi and Igwe (2010) in one of their works, investigate the causality among budget deficit,
money supply growth and inflation, using Vector Error Correction (VEC) model and Pair wise
Granger causality test. The result shows that inflation and budget deficit have bilateral/feedback
causality. This proved that the change that occurred in inflation could be explained by its lag and
also lagged value of budget deficit. In the same vain, changes that occur in budget deficit is
explained by its lagged values and the lagged values of inflation.
The present study investigates the nexus between budget deficit and inflation, and the direction of
causality in Nigerian economy. To achieve this, Vector Error Correction Mechanism (VECM)
will be used to examine the relationship between budget deficits and inflation in Nigeria. While
Granger causality test will be employed to establish the direction of causality between budget
deficit and inflation in Nigeria.
3. Analytical Technique
Most common empirical method to examine the budget deficit-inflation nexus has been to
employ a single equation model for money growth or inflation, treating deficits as independent
variable. In this study, the model specification of inflation mirrors the work of Imimole and
Enoma (2011) and Oladipo and Akinbobola (2011) with little modification. The specification of
the model considers the following variables, Rate of Inflation (INF) as dependent variable; while
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5. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 3, No 10, 2012
Government Debt (GD), Budget Deficit (BD), money supply (narrow money supply, M1), (MS),
will be used as independent variables.
The model is specified thus:
INF = f (GD, BD, MS ) ...i
BD = f (GD, INF , MS ) ...ii
Explicitly
INF = α 0 + α 1GD + α 2 BD + α 3 MS + U i ...iii
BD = β 0 + β1GD + β 2 INF + β 3 MS + U i ...iv
where: INF is the rate of inflation
GD is Government Debt
BD is Budget Deficit
MS is Money Supply (M1)
α0 is constant intercept
α1, α2 and α3 are parameter coefficient of GD, BD and MS respectively.
3.1 Sources of Data
For the purpose of estimating the empirical nexus between budget deficit and inflation in
Nigerian economy, annual data on Inflation rate (INF), Government Debt (GD), Budget Deficit
(BD) and Money Supply (MS) are collected from Statistical Bulletin and Annual Report and
Statement of Account published by Central Bank of Nigeria (CBN) between the period of 1980 to
2009.
3.2 Estimating Techniques
A multi-stage VAR (Vector Auto-Regressive) modelling approach involving unit root tests, co-
integration examination, and the Vector Error Correction Mechanism (VECM) were employed in
this study. This enables us to test for the effect of budget deficit on the inflationary rate in an
economy. The Vector Error Correction Mechanism (VECM) is employed to establish the
relationship between variables and to know which of these variables causes the other. Also,
Granger causality test was used to test for the direction of causality between budget deficit and
inflation in Nigeria.
4. Results and Discussion
This section includes the review budgetary provisions in Nigeria between 1980 to 2009. Also it
presents the analysis and interpretation of the empirical results. It begins with the descriptive
analysis of the data and followed by the results of various empirical test conducted in the study.
The study includes the Phillips-Perron (PP) and Kwiatkowski-Phillips-Schmidt-Shin (KPSS)
statistical test to determine the time series characteristics of each variable, Granger causality test
to determine the short–run relationship between inflation and budget deficit, and cointegration
tests in VECM, to determine the long–run relationship between inflation and budget deficit.
After establishing the direction of causality between inflation and budget deficit, the study shift
focus on the inflation equation and proceed to report other test conducted on it. The chapter
concludes by discussing some policy implication of the findings.
4.1 Budgetary Provisions in Nigeria from 1980 to 2009
Table 1 shows the budget deficit/surplus, the percentage changes in budget deficit/surplus and the
corresponding rate of inflation for each year from 1980 to 2009 in Nigeria. In most of the years
under review, government expenditure in Nigeria has consistently exceeded revenue beginning
from 1980 to 2009 except in 1995 and 1996 when surplus were recorded.
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Table 1: Budget Deficit and Inflation in Nigeria from 1980 to 2009
Year Budget Deficit/Budget Percentage of Changes in Budget Inflation rate
Surplus (#Million) Deficit/Budget Surplus (%) (%)
1980 -1,975.20 35.1 9.9
1981 -3,902.10 97.6 20.9
1982 -6,104.10 56.6 7.7
1983 -3,364.50 44.9 23.2
1984 -2,660.40 20.9 39.6
1985 -3,039.70 14.3 5.5
1986 -8,254.30 171.6 5.4
1987 -5,889.70 28.7 10.2
1988 -12,160.90 106.5 38.3
1989 -15,134.70 24.5 40.9
1990 -22,134.70 46.3 7.5
1991 -35,755.20 61.5 13.0
1992 -39,532.50 10.6 44.5
1993 -65,157.70 64.8 57.2
1994 -70,270.60 7.8 57.0
1995 1,000.0 98.6 72.8
1996 32,049.40 310.5 29.3
1997 -5,000.00 84.4 8.5
1998 -133,389.30 2,569.8 10.0
1999 -285,104.70 113.7 6.6
2000 -103,777.30 63.6 6.9
2001 -221,048.90 113.0 18.9
2002 -301,401.60 36.4 12.9
2003 -202,724.70 32.7 14.0
2004 -172,601.30 14.8 15.0
2005 -161,406.30 6.4 17.9
2006 -101,397.50 37.2 8.2
2007 -117,237.10 15.6 5.4
2008 -47,378.50 59.6 11.6
2009 -810,020.70 1,590.7 27.8
Source: CBN statistical Bulletin 2009.
(-): Budget Deficit.
(+): Budget Surplus.
From Table 1, budget deficit stood at #1,975.20 million in 1980 while the rate of inflation during
the same period was 9.9%. Inflation rose from 9.9% in 1980 to 20.9% in 1981 when budget
deficit increased by 97.6% from #1,975.20 million in 1980 to #3,902.10 million in 1981. But
there was a decline in the rate of inflation from 20.9% in 1981 to 7.7% in 1982 when budget
deficit further increased from #3,902.10 million in 1981 to #6,104.10 in 1982, representing 56.63%
during the period.
However, budget deficit declined from #6,104.10 in 1982 to #3,364.50 in1983 which represented
44.9% reduction in budget deficit and it further declined by 20.9% when the deficit reduced to
#2,660.40 in1984. But inflation increased from 7.7% in 1982 to 23.2% in 1983 and increased
further to 39.6% in 1984.
Again, Budget deficit started increasing from 1985 up till 1994, while rate of inflation was
fluctuating with the highest inflationary rate of 57.2% was recorded in 1993 and the lowest rate
of inflation of 5.4% occurred in 1986. However, Nigeria recorded budget surplus in 1995 and
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1996. It was in 1995 when budget surplus in Nigeria stood at #1billion that the highest rate of
inflation of 72.8% was recorded in Nigeria. But inflationary rate falls from 72.8% in 1995 to 8.5%
in 1997 when Nigeria recorded budget deficit of #5billion in 1997. Between 1997 to 2009
Nigeria maintained her budget deficit, while rate of inflation was fluctuating between the same
periods.
4.2 Descriptive Statistics of Data from 1980 – 2009
Table 2 Descriptive Statistics Data of the Variables
Variable Observation Mean Std. Deviation
INF 30 20.73 18.28
BD 30 - 97459 161679.7
GD 30 1776905 1955603
MS 30 1473640 26880101
Source: Computed from Data
− The variables have relatively high variability
− The mean of budget deficit is negative which is expected because it is Budget Deficit (BD)
which is – 97459
− The mean value of Inflation (INF) was 20.7, while that of Government Debt (GD) is
1776905 and the mean of Money of Supply (MS) is 1473640.
− The variability of the variables were high compared to the mean of the variables, except
the variability of inflation which was a little bit lower compared with its means.
− The number of observations of the variable was 30.
Because of the high variability exhibited by the variables which is due to the fact that they
are not measured by the same unit, the growth rate of each variable was used.
Table 3 Correlation Matrix of Selected Variables
INF GD BD MS
INF 1.0000
GD 0.2814 1.0000
(0.1320)
BD 0.2458 0.62 1.0000
(0.1905) (0.0001)*
MS 0.311 0.51 0.665 1.0000
(0.09) (0.0042)* (0.0001)*
Source: Computed from Data
Note:
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(i) * significant at both 1% and 5% level.
(ii) Probability of t-test for the correlation coefficients is in parenthesis.
The result in Table 4.2 shows that only three correlation coefficients among the variables are
significant at both 1% and 5% level. Correlation between BD and GD was positive (0.62) and
significant at both 1% and 5%. This indicates that there is a significant positive relationship
between Government Debt and Budget Deficit. This same trend was witnessed between money
supply and Budget Deficit (r=0.67).
It implies that Budget Deficit is positively correlated with money supply. On the contrary, there
exist a positive correlation between money supply and government Debt. This suggests that an
increase in government borrowing will lead to an increase in money supply.
The results in Table 4.3 are not conclusive on their own but give us a guide to the degree and
nature of relationship among the selected variables.
Ho: unit root
Table 4a: Phillips-Perron Test at level.
Variable Phillips-Perron Critical value 1% Critical value Level of
Test Statistic 5% integration
INF -2.649923 -3.679322 -2.967767 Non Stationary
GD -5.961693 -3.679322 -2.967767 I(0)
BD -4.647353 -3.679323 -2.967767 I(0)
MS -5.369509 -3.679322 -2.967767 I(0)
Source: Computed from Data.
Ho: no unit root
Table4b: KPSS Unit Root Test at Level
Variable LM Test Critical Value Critical Value Level of
Statistics 1% 5% integration
INF 0.1814 0.7390 0.4630 I(0)
Source: Computed from Data.
4.3 Time Series Properties of Variables in the Model
The Phillips-Perron and Kwiatkowski-Phillips-Schmidt-Shin (KPSS) test for unit root were
conducted for the variable in the model. The results of the test at level are presented in Table 4a
and 4b. Accordingly, the null hypothesis (Ho) for Philips-Perron unit root test was that, there was
a unit root in each variable. That is, each variable was stationary at levels while the null
hypothesis (Ho) for KPSS unit root test was that, there was no unit root.
As usual, the rule of thumb for PP test is that, the null hypothesis of unit root should be accepted
if the Phillips –Perron statistic is less negative, that is greater than critical value while the rule of
thumb for KPSS is that, the null hypothesis of no unit root be accepted if the LM (KPSS)
statistics is less than the critical value as shown in Table 4b. The result in Table 4a indicates
therefore that all variables are stationary at their level except INF. However, INF was found
stationary using KPSS unit root test. This was confirmed by the value of Mackinon (1996)
associated one-sided P-value in each variable. INF variable which was non-stationary at level
was confirmed stationary at level using the Kwiatkowski-Phillips-Schmidt-Shin (KPSS) unit root
as shown in Table 4b. The economic implication of stationary variable was that of absence of
persistence shock. That is, if there is disturbance on the variables, the variable will move together
at the same rate back to equilibrium level.
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4.4 Johansen’s Cointegration Test of the Nexus between Budget Deficit and Inflation in Nigeria
It appears that the series are integrated of the same order. There is need to test whether these
variables are cointegrated or not. The cointegration results are reported in Table 5. We first
conducted a bivariate cointegration test on budget deficit and inflation. The test result suggests
that budget deficit and inflation in Nigeria are cointegrated. That is, these variables do move
together in the long-run at the same rate.
Table 5: Johansen Bivariate Co-integration Rank Test.
Ho Ha Statistic Trace Critical value Max-Eigen Critical value
0.05 statistic 0.05
r=0 r=1 18.57190 15.49471 11.17146 14.26460
r≤1 r=2 7.4004334 3.841466 7.400434 3.841466
Source: computed from data.
BD = 14.46270 INF 1
( 6.52294)
The result of Johansen Bivariate Co-integration rank test from the normalized cointegration
coefficient shows the relationship between budget deficit and inflation. Equation 1 indicates that
there is long-run relationship between budget deficit and inflation. It shows that inflation exhibits
a positive relationship with budget in bivariate sense. The economic implication is that an
increase in inflation will also lead to an increase in the level of budget deficit. This result can be
justified by the fact that inflation at any level will lead to the reduction in the real income thereby
reducing the value of revenue which will result in increasing the tendency of budget deficit since
in this case expenditure will always be above income revenue.
A multivariate cointegration was conducted on inflation, budget deficit, government debt and
money supply. The result is reported in Table 6
Table 6 Johansen Multivariate Cointegration Rank Test
Ho Ha Trace Test Critical Value 0.05 Max.Eigen Critical value 0.05
statistic
r=0 r=1 73.77213 47.85613 38.57538 27.58434
r≤1 r=2 35.19675 29.79707 17.25526 21.13162
r≤2 r=3 17.94149 15.49471 9.468623 14.26460
r≤3 r=4 8.472865 3.841466 8.472865 3.841466
Source: computed from data
The trace test indicates four cointegrating equations at 0.05 level while the maximal Eigen value
confirm one cointegrating equation.
INF = 0.0123BD + 0.1424GD + 0.0015MS .2
(0.0160) (0.0068) (0.0170)
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The result from normalized cointegration coefficients shows the long-run relationship between
inflation as dependent variable and budget deficit, government debt and money supply as
independent variables, as it is stated in estimated equation 2.
From estimated equation 2, there is existence of a direct relationship between inflation as
dependent variable, budget deficit, government debt as well as money supply as independent
variables, which agree with the a-priori expectation in this study. This implies that an increase in
any of the following budget deficit, government debt or money supply, or an increase in both
would lead to an increase in the level of inflation. That is, if budget deficit is increase by one,
when other variables assume zero value, inflation will be increased by 0.0123. So also, an
increase in government debt by one when all other variables assume zero value will result to an
increasing in the level of inflation by 0.1424. Again, an increase in the value of money supply by
one when other variables assume zero value, will lead to an increase in the level of inflation by
0.0015. This is also in agreement with the a priori expectation of this study.
4.5 The Result of Vector Error Correction Mechanism (VECM) and Granger Causality
Test
When co-integration exists, the Engle Granger theorem establishes the encompassing power of
ECM over other forms of dynamic specifications. The ECM is specified in over parametised
form though the parsimonious depicts the best fitted result for the dynamic specification, the
difference between the two is the choice of the lag-length included. The result of vector error
correction mechanism (VECM) and granger causality test is presented in Table 7
Table 7: Estimates of the Vector Error Correction Model (VECM)
Variables ∆INF Equation Std. Error ∆BD Equation Std. Error.
Constant -0.017746 2.67181 49.67677 139.247
∆INF (-1) 0.125655 0.16459 -5.272699 8.57804
∆INF (-2) -0.459843 0.16357 -10.78773 8.52463
∆GD (-1) -0.013748 0.02981 -0.769411 1.55347
∆GD (-2) 0.020917 0.01770 -0.516687 0.92249
∆BD (-1) -0.000221 0.00647 -0.637959 0.33700
∆BD (-2) -0.001649 0.00525 -0.280836 0.27381
∆MS (-1) 0.004899 0.01079 -0.020210 0.56208
∆MS (-2) -0.001319 0.01085 0.033949 0.56571
ECM (-1) -0.230920 0.21068 -5.630635 10.9798
R-Squared 0.572290 0.393451
Adj. R-Squared 0.345855 0.072337
F-Statistic 2.527390 1.225268
Source: Computed from data.
The equation of error correction model is specified thus.
∆INF = − 0.0178 + 0.1257∆( INF (−1)) − 0.4598∆( INF (−2)) − 0.0138∆(GD(−1)) +
( 2.6718) ( 0.1646) ( 0.1636) ( 0.0298)
0.0209∆(GD(−2)) − 0.0002∆( BD(−1)) − 0.0017∆( BD(−2)) + 0.0049∆( MS (−1)) +
( 0.0177) ( 0.0065) ( 0.0053) ( 0.0108)
0.0013∆( MS (−2)) − 0.2309ECM (−1) 3
0.0109 ( 0.2107)
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∆BD = 49.6768 − 5.2727∆( INF (−1)) − 10.7877∆( INF (−2)) − 0.7694∆(GD(−1)) −
(139.24) (8.5780) (8.5246) (1.5535)
0.15167∆(GD(−2)) − 0.6380∆( BD(−1)) − 0.2808∆( BD(−2)) − 0.0202∆(MS (−1)) +
( 0.9225) ( 0.3370) ( 0.2738) ( 0.5621)
0.0340∆(MS (−2)) − 5.6306ECM (−1) 4
( 0.5657) (10.9798)
Since the vector error correction representation can be used to test causality, the result in Table 7
is also the Granger –causality result.
From the result, it appears that the error correction term in both equations were well defined, that
is, their associated coefficients are negative and statistically significant at 0.95 level, which
indicate a feedback of approximately 23.1 per cent (from INF equation) of the previous year’s
disequilibrium and a feedback of approximately 563.1 percent (for BD equation) of previous
year’s disequilibrium. This means that, the speed of adjustment to equilibrium here was from
behind (that is from previous years) and highly significant in INF equation considering the fact
that F-statistic of 2.5274 is greater than F-tabulated which was 2.4642. This confirms the
significance of relationship between budget deficit and inflation in INF equation (that is equation
3). However, the value of F-statistic of 1.2253 which was less than the value of F-tabulated of
2.4642 indicated that the relationship between inflation and budget deficit in BD equation (that is
equation 4), was insignificant.
The speed with which the model converges to equilibrium was shown by ECM coefficients. The
equation of interest in this study was the INF equation. The results show that, the coefficient of
ECM (-1) is -0.2309, it was properly signed and highly significant, indicating that the adjustment
is in the right direction to restore the long-run relationship. The magnitude of (ECM (-1) was
lower in the BD equation than that of INF equation.
The interpretation of the ECM is further explained as follows. If there was a change in the level
of inflation, that is, ∆ INF ≠ 0, also, if there was disequilibrium in last period (ECM ≠0). In which
case some changes in inflation was necessary to restore equilibrium, or there was a change in the
independent variables in the current period which was caused by changes in equilibrium
condition (as shown in cointegration equation), this implies that inflation (INFt) should also
change. The anticipated signs and magnitude of the coefficients are as follows. The coefficient of
ECM is the error correction or disequilibrium correction – coefficient. If the ECM coefficient is
greater than zero it means there is a “surplus” of the dependent variable, therefore a reduction is
required to restore equilibrium. But if otherwise as in Table 4.7, an increase is required through
the independent variable (Patterson, 2000).
The significance of the error correction model is that, about 23.1 per cent of short run
inconsistencies were being corrected and incorporated into long-run relationship among the
variables and their past value in INF equation. The non-zero value of the ECM shows that there
was disequilibrium in the previous growth in inflation, some changes in budget deficit is
therefore necessary to restore equilibrium because the ECM value is less than zero while the
speed of adjustment is about 23.1 per cent. This significance of ECM also supports the
conclusion of co-integration. The short-run dynamics are capture by the individual parameter
except that of the ECM term. The F-statistic for inflation equation is significant at 0.95 levels and
probability of F-statistics shows that we reject the null hypothesis therefore there is no
bidirectional causality between budget deficit and inflation in the Nigerian economy. This
suggests that the causality is from budget deficit to inflation and not from inflation to budget
deficit.
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The degree of causality between budget deficit and inflation was explained by the value of R-
squared. The value of R-squared from budget deficit equation was 0.3953 while the value of R-
square from inflation equation was 0.5723. This explained that the degree of causality from
budget deficit to inflation was about 57 per cent according to the value of R-squared from
inflation equation. On the other hand, the degree of causality from inflation to budget deficit was
about 40 per cent according to the value of R-squared from budget deficit equation. This implies
that there is bi-directional causality between budget deficit and inflation but the degree of
causality from budget deficit to inflation was higher and significant while the degree of causality
from inflation to budget deficit was low and insignificant.
The R2 adjusted (0.3459) for the inflation equation indicates that 34.6 per cent of variations in
INF growth have been explained by the joint variation of the variables in the model. Also the R2
adjusted (0.0723) for budget deficit equation indicates that 7.2 per cent of variations in growth of
fiscal deficits have been explained by the joint variation of the variables in the model.
Although the result was contrary to the report of Aliyu and Englame (2009); Ogunmuyiwa (2008);
who were of the opinion that budget deficit was not inflationary in Nigeria, it agreed with the
research works of Iyoha (2000); Obadan (2001); Fatukasi (2006); and Oladipo and Akinbobola
(2011) whose results of their research work indicated that budget deficit was inflationary in
Nigeria. The result of this research work defer a bit with the result of the research work of
Chimobi and Igwe (2010) which established bi-directional causality between budget deficit and
inflation in Nigeria. However, the result of this research confirmed the result of research work of
Oladipo and Akinbobola (2011) which said that there was uni-directional causality (from budget
deficit to inflation) between budget deficit and inflation in the Nigerian economy.
5. Conclusion
Empirical evidence from this research work has shown that there is a positive relationship
between budget deficits and inflation in the Nigerian economy. Thus, whenever there is a change
in budget deficit, the rate of inflation is adversely affected in line with the empirical finding of
the research work.
The results of this study shown that, there was uni-directional causality between budget deficit
and inflation in Nigeria. Although, the degree of causality from budget deficit to inflation was
much higher and significant, however, the degree of causality from inflation to budget deficit was
very low and insignificant. These results provide the basis to conclude that efforts targeted at
inflationary control could be best achieved if it was aimed at fiscal deficit reduction. Therefore
any efforts targeted at controlling inflation could be best achieved by formulating policies geared
towards reducing fiscal (budget) deficit.
The direct causal relationship between budget deficit and inflation according to the results of this
research work, indicate that an increase in budget deficit will also lead to a corresponding
increase in the level of inflation. Hence, for the level of inflation to be reduced in Nigeria,
government need to cut down the current level of her expenditure, in form of reducing the level
of her budget deficit, in order to reduce the rate of inflation.
5.1 Policy Implication and Recommendations
Based on the findings of this study which shown that, there was causal relationship between
budget deficit and inflation in Nigeria, government should display a high sense of transparency in
the fiscal operations to bring about realistic fiscal deficits. Fiscal deficits, where recorded should
be channeled to productive investments like road construction, electricity provision and so on,
that would serve as incentives to productivity through the attraction of foreign direct investment,
in other to reduce the incidence of inflation in Nigeria.
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Also, the implication of these findings was that both budget deficit and inflation could be caused
by money supply meaning that they were both monetary phenomenon. Inflation was also found
to be dependent on performance of the budget (deficit). The increase in money supply could as
well help to cushion the extent of budget deficit in an economy, whereas, the same increase in
money supply might still lead to an increase in the rate of inflation. Hence, adequate monetary
policy should be geared towards balancing the role money supply performs to both budget deficit
and inflation, noting that there was uni-directional relationship between budget deficit and
inflation.
Based on the causal relationship that exist between budget deficit and inflation, relevant measures
has to be put in-place in order to enhance policy coordination among various arms of government,
especially monetary policy should be made to complement fiscal policy. According to the result
of this research work, inflation has been established as monetary phenomenon in Nigeria. Then,
for inflation to be curtailed, government should strongly adhered to fiscal discipline at all levels
for budget deficit to be effective.
In the quest of Nigeria to achieve high and sustained long-run economic growth, monetary policy
has to be strengthened to act as checks and balances, that is, monetary policy should be used to
complement fiscal policy, in order to curtail inflation when budget deficit is used as fiscal policy
instrument.
From the research study, it was impossible for aggregate demand side of the economy be
motivated without causing inflation in an economy. Hence government has to employ policy mix
so as to put inflation under control if the gain that government intends to achieve through the
promotion of economic growth is not to be eroded.
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He is now an Associate Professor of Economics and serving as Head of Department, Department
of Accounting Ekiti State University.
He was born 6th of July, 1960 and a senior member of Nigerian Economic Society. He holds
B.Sc., Economics in University of Ilorin (1986); M.Sc. Economics, University of Lagos (1992)
and PhD. Economics, Federal University of Technology, Akure, Onodo State Nigeria (2004). He
has been teaching Microeconomics, Macroeconomics and Econometrics in the Ekiti State
University Ado-Ekiti since 1993.
Olalere, Sunday Shina got admission to Ekiti State University, Ado-Ekiti for Master’s Degree
Programme in the Department of Economics.
He was born on 26th Jan urary, 1980. He holds B.Sc. Economics, University of Ado-Ekiti now
Ekiti State University, Ado-Ekiti (2004). He has completed his Master Degree Programme with
Ph.D. grade, Ekiti State University, Ado-Ekiti.
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