FISCAL DEFICIT, FINANCING OPTIONS AND MACROECONOMIC STABILITY

Abstract

This study examined the impact of deficit financing (DF) on Nigeria’s economic growth from 1984
to 2019. In order to capture the objectives of the study, secondary data were sourced and relevant methods of
analysis were adopted which include unit root test and ARDL bound testing. The theoretical framework
guiding the study anchors on Hirschman’s theory of unbalanced growth (HTUG). The ARDL estimated tests
revealed that DF has positive impact on each of the directly productive sectors (DPS) in Nigeria. Given the
empirical results on average, the study conclude that Nigeria needs to apply more disaggregated measures in
management of deficit financing and recommend that Nigerian government should prioritize fixing the
economy with respect to deficit financing, sector and economic growth by investing more on viable sectors
that has ability to keep abreast of others.