Fiscal Deficits and Macroeconomic Aggregates in Nigeria

The study was carried out to determine the relationship between fiscal deficit and macroeconomic performance in Nigeria over the period 1980 to 2010. The specific objectives include: to determine the impact of fiscal deficit on macroeconomic aggregate in Nigeria, to examine whether fiscal deficit had led to economic growth in Nigeria, and to find out the nature of relationship between fiscal deficits and macroeconomic aggregates in Nigeria using data from secondary sources. The study employed the Ordinary Least Square in estimating the equation. Preliminary test of stationarity and co integration of variables using the Augmented Dickey Fuller (ADF) test and the co integration test using the Engle Granger procedure were conducted respectively. However, the empirical findings showed that fiscal deficits even though that it met the economic a prior in terms of its negative coefficients yet, did not significantly affect macroeconomic output. The result also show a bilateral causality relationship between government deficit and gross domestic product, government tax, and unemployment, while there is an independent relationship between government deficit and government expenditure and inflation. Based on these findings, appropriate recommendations were made.