Social and Behavioral Sciences Commons^™

Macroeconomic Shocks And Fiscal Deficit Behaviour In Nigeria: A Vecm Approach., M. O. Abeng, K. S. Alehile

Economic and Financial Review

This paper focuses on establishing the links between fiscal deficit and short-term changes in major macroeconomic variables like real output, interest rate, exchange rate, inflation rate and crude oil price in Nigeria. Empirical results show that the model adequately explains the behaviour of government of fiscal deficit and that while the accumulation of deficit is not at all detrimental to the economy per se, prudence should be exercised in the financing options adopted and more so the appropriate application of such funds to selffinancing projects. It is recommended that government broaden its tax-net to curb the surging borrowing as well …