An Empirical Analysis of The Effects of Fiscal Deficits on Economic Growth in Nigeria

Abstract-- The main objective of this paper is to investigate the effects of fiscal deficit on economic growth in Nigeria through the application of OLS techniques, Augmented Dickey-Fuller technique, Granger causality test and Johansen cointegration test. The results of unit root suggested that all the variables of the model are stationary at first difference. The results of Causality suggested that there is one-way causation between exchange rate and real GDP, between government fiscal deficit and real GDP, between domestic investment share of real GDP and real GDP. Causation runs from exchange rate to real GDP, real GDP to government fiscal deficit, real GDP to domestic investment share of real GDP. The result also shows no causation between some variables of the model especially, exchange rate and interest rate, government fiscal deficit and interest rate, domesti