International Journal of Advanced Multidisciplinary Research and Studies
Volume 1, Issue 3, 2021
Impact of fiscal deficits financing on Economic Growth in Nigeria: An approach of time series Econometric Model
Author(s): Ihezie Ugochukwu Remigius, Ochuba Chinedu Daniel, Umeh Anthony Chinedu
This study examined the impact of fiscal deficits financing on economic growth in Nigeria. The study sought to: (i) verify the impact of external borrowing financing on the economic growth in Nigeria; (ii) investigate the impact of internal borrowing financing on the economic growth in Nigeria and (iii) evaluate the impact of external reserves financing on the economic growth in Nigeria. The Expost-facto research method was the research design. The methods of data analysis were Augmented Dickey-Fuller Unit Root test statistic, Johansen Co-integration test, error-correction mechanism, Breuch-Godfrey Serial correlation LM Test, Ramsey Reset and Durbin-watson test. The following are the major findings of the study: (i) External borrowing finance (EXBF) has negative insignificant impact on real GDP (RGDP) (t – statistics (-1.2594) < t0.05 (1.684); (ii) Internal borrowing finance (INBF) has positive significant impact on real GDP (RGDP) (t – statistics (3.9085) > t0.05 (1.684) and (iii) External reserve (EXRV) has negative significant impact on real GDP (RGDP) on real GDP (RGDP) (t – statistics (-2.6994) > t0.05 (1.684). The study recommends the following (1) The Federal Government should not implement fiscal deficit finance that do not exceeds the international bench mark of 3 percent of GDP in order to run-out from prolong debt service payment and sustainable debt burden. (2) The Federal Government should ensure judicious use of borrowed fund and should invest such funds on project that can generate good return in the future. Deficit financing should be targeted on the productive sector of the economy.
Keywords: Fiscal policy, Fiscal deficits finance and Economic Growth
Download Full Article: Click Here