Deficit Financing and Economic Growth in Nigeria: 1987-2017

Abstract

The debt profile of the Government of Nigeria has been on the increase from 1986; climaxing during the worst recession Nigeria economy has entered into after the structural adjustment programme (SAP). With the reduction in government revenue occasioned by the fluctuations of price of crude oil in the international market and absolute recklessness on the part of successive government, the government has no option than to borrow to fund its day to day activities.  This study examined the effect of deficit financing on economic growth of Nigeria from 1987 to 2017. Vector Autoregressive Estimates was used in estimating the model.  The analysis performed revealed that deficit financing has positive but insignificant effect on Nigerian economic growth. We recommended that government should strive to diversify its revenue base and also demonstrate a high level of transparency in both its monetary and fiscal operations among others.