Public Budget Deficit and Economic Growth in Nigeria: Evidence from NARDL Approach

Jabir Muhammed Usman, Olabode Agunbiade and Jonah Akuso
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Jabir Muhammed Usman: Department of Economics, Mewar International University, Masaka Nigeria.
Olabode Agunbiade: Department of Economics, Mewar International University, Masaka Nigeria.
Jonah Akuso: Department of Economics, Mewar International University, Masaka Nigeria.

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 3s, 3884-3896

Abstract: The study examines public budget deficit financing and economic growth in Nigeria using time series data for the period of 1986 to 2021. The study uses Non-Linear Autoregressive Distributed Lag (NARDL) as its estimation technique. Dialectically, the study reveals that public budget deficit financing sources such as; treasury bills, treasury bonds, multilateral debt, bilateral debt, oil revenue to total revenue ratio, non-oil revenue to total revenue ratio and external reserve had significant positive and negative impacts on economic growth in the Nigerian economy within the study period. However, specifically, public budget deficit financing sources such as; treasury bills, treasury bonds, oil revenue to total revenue ratio, non-oil revenue to total revenue ratio and external reserve have asymmetric impacts on economic growth in the Nigerian economy within the period under review. The study concludes that the imposition of a linear symmetric in modeling public budget deficit financing in the country could be misleading as far as Nigerian economy is concerned. Hence, the use of NARDL model for public budget deficit financing contributes to the understanding of the nonlinear dynamics between public budget deficit financing and economic growth, thereby leading to more effective and efficient forecasting and policymaking. The study recommends that government at all tiers in the country should maintain high level of fiscal discipline in order to ensure optimal utilization of treasury bills, treasury bonds, oil revenue to total revenue ratio, non-oil revenue to total revenue ratio and external reserve towards realizing the desired level of economic growth in the Nigerian economy.

Date: 2024
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