Using quarterly time-series data from 1970-2012, this paper examines the responses of budget deficits to selected macroeconomic fundamentals in Nigeria. Although budget deficit responds with a positive movement for every one standard deviation positive shock to real gross domestic product at the early stage, subsequent positive shocks or variations in real gross domestic product elicit a negative response from budget balance right from the 10th period down to the 172nd period. Budget deficit shows signs of decline at the initial stage in response to a positive innovation in real interest rate. However, this response normalized to a positive one as from the 11th period and remains so all through the periods under review. As more money is released into the economy, budget deficit responds to this positive shock in money supply with a continuous decline all through the periods under review. Implicit, but central to these responses by budget deficit is that private sector investment remains the key to an economic growth that will not mortgage a country’s future for today’s survival.
Aizenman, J. and. Marion, N.P. (1993), “Policy uncertainty, persistence and growth”, Review of International Economics volume 1, 145-163.
Aizenman, J., and Marion, N.P. (2003), “The High Demand for International Reserves in the far East: what’s going on?”, Journal of the Japanese and International Economies, vol.17, No.3, 370 -400.
Al-khedair, S. (1996), The Impact of Budget Deficits on the Key Macroeconomic Variables in Major Industrial Countries, Ph.D Dissertation, Florida Atlantic University.
Aruwa, S. (2010), Public Finances and Economic Growth in Nigeria: Fiscal Policy Implications in Crises Era, in faculty conference proceeding, faculty of Administration, Nasarawa State University, Keffi.
Auer, B, Alan, J. and Laurence J. (1986), Dynamic Fiscal Policy, manuscript.
Barrow, R. (1989), Ricardian approach to Budget Deficits, Journal of economic Perspectives, A cross country of Growth, Saving and Government. NBER working paper No. 2855.
Ben-Caleb, E and Agbude, G. (2011), ‘’Budget Discipline under military and civilian Regimes: Any Difference in Nigeria? In International journal of Research in Commerce, IT and Management, Vol.1, No. 1, 13-17.
Bernheim, B. (1989), “A Neoclassical perspective on Budget Deficits”, Journal of Economic Perspective, vol.3.
Christopher A. (1990), Rational expectations modeling with seasonally adjusted data, discussion paper/institute for Empirical macroeconomics 35, Federal Reserve Bank of Minneapolis.
Diamond, P. (1965), ‘’National Debt and Neoclassical Economic Growth”, American Economic Review, Vol. 55, 1125 ? 1150.
Durlauf, S. and Blume, L. (2008), Impulse Response Function, .http://www.dictionaryofeconomics.com/article?id=pde2008_I000283.
Dywer, G. (1982), “Inflation and government Deficits”, Economic Inquiry, vol.20.
Easterly, W. and Schmidt-Hebbel, K. (1993), “Fiscal Deficits and Macroeconomic performance in Developing countries’’, The World Bank Research Observer, Vol.8, No. 2, pp.211 ? 235.
Eigbiremolen, G.O. (2013), “Causality and Dynamics of Foreign Direct Investment and Economic Growth in Nigeria: An Impulse Response Function Analysis”, Journal of Economics and Sustainable Development, 4, (19): 44-51.
Giles. D. (2013), When is an Autoregressive Model Dynamically Stable? http://davegiles.blogspot.ca/2013/06/when-is-autoregressive-model.html
Guess, G. and Koford, K. (1984), “Inflation, Recession and federal Budget Deficit (or Blaming Economic problems on A Statistical Mirage), policy sciences, vol.17.
Kaufman, D. (2010), ‘’Governance matters: worldwide governance Indicators Highlight Governance successes, reversals and failures, [on ? line] Available at: http://www.brookings.edu/research/opinions/2010/09/24
Karras, G. (1994), “Macroeconomic effects of budget deficits: further international evidence, Journal of international money and finance, Elsevier, Vol.13, No. 2, 190-210.
Nelson, M. and Sing, R. (1994), “Deficit Growth Connection: some Recent Evidence from Developing Countries”, Economic Development and Cultural Change, 43(1): 167-91.
Olaoye, O. (2010), “Budget Discipline in Government: A key to Building and Sustaining Buoyant External Reserves”, The social sciences, 5(5), pp. 386-390.
Olomola, A. (2006), Performance Management and its Relevance for Effective Budget Process in Nigeria, In Towards Effectiveness of the Budgetary Process in Nigeria, edited by B. ONI, and A.S. Olomola, Nigerian Institute of Social and Economic Research (NISER), Ibadan.
Omolehinwa, E. (2012), Accounting for Peoples money, in University of Lagos Inaugural Lecture Series. University of Lagos Press, Lagos.
Organization for Economic Cooperation and Development, OECD (2002). “Best practices for Budget Transparency’’, in OECD journal on Budgeting, Vol. 1, No. 3, 7-14.
Osanyintuyi, T. (2007), Budgeting and Development Policy in Nigeria, [on ? line] Available at: http://www.scribd.com/doc/38540444.
Overseas development Institute (2004), why budgets matter: The New Agenda of Public Expenditure Management, in ODI briefing paper, London. [On ? line] Available at: http://www.odi.org.uk/resources/download/1370.pdf
Petterson, K. (2006), an Introduction to Applied Econometrics: A Time Series Approach, New York, Palgrave.
Sims, C. (1990), Inference in Linear Time Series Models with some Unit Roots, Econometrica, 58, 113-144.
Woo, N. (2000), “Comments on reform without losers: an interpretation of China’s dual track approach to transition, lau, Qian and Roland, manuscript.
Eigbiremolen, G. time O., & Nchege Johnson Ezema, A. O. (2015). Dynamics of Budget Deficit and Macroeconomic Fundamentals: Further Evidence from Nigeria. International Journal of Academic Research in Business and Social Sciences, 5(5). 27-37.
Copyright: © 2015 The Author(s)
Published by Knowledge Words Publications (www.kwpublications.com)
This article is published under the Creative Commons Attribution (CC BY 4.0) license. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this license may be seen at: http://creativecommons.org/licences/by/4.0/legalcode
