ABSTRACT

This study examined Fiscal Deficit Financing and Economic Development using empirical evidence from Nigeria from 2005-2014. Methodologically, the study adopted a quantitative research; employing time-series data (on Human Development Index which was used as a proxy for Economic Development and on Budget Deficit, External debt, Domestic Debt which were proxies for Fiscal Deficit Financing and on Interest Rate which was used as a control variable) sourced from the CBN Statistical Bulletin and Annual Reports 2015. Statistically, univariate analysis (using ADF and PP) tests, Johansen Co-integration test, OLS (short-run and long-run) analyses were performed. Multicollnearity test was performed to determine the absence of high collinearity among the explanatory among the variables. Empirical evidence from the analyses show that fiscal deficits which have now become a monotonous recurrent expenditure of government budgets in Nigeria for decades especially in the Nigerian context and within the period under review, have a negative impact on economic development. Consequently, it is therefore recommended inter alia, that government should endeavour to avoid consistent budget deficits. Budget deficit is not totally avoidable but can be controlled.

TABLE OF CONTENTS

TITLE PAGE- - - - - - - - - - i

DECLARATION- - - - - - - - - - ii

CERTIFICATION- - - - - - - - - iii

DEDICATION- - - - - - - - - - iv

ACKNOWLEDGEMENT- - - - - - - - v

ABSTRACT- - - - - - - - - - vii

TABLE OF CONTENTS- - - - - - - viii

LISTS OF TABLES- - - - - - - - - ix

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study- - - - - - 1

1.2 Statement of the Problem- - - - - - - 3

1.3 Objectives of the Study- - - - - - - - 4

1.4 Research Questions- - - - - - - - 5

1.5 Statement of Hypotheses- - - - - - - 5

1.6 Significance of the Study- - - - - - - 5

1.7 Scope of the Study- - - - - - - - 6

1.8 Limitation of the Study- - - - - - - - 7

1.9 Plan of the Study- - - - - - - - - 8

1.10 Definition of Terms- - - - - - - - 9

REFERENCE- - - - - - - - - - 10

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction- - - - - - - - - 11

2.2 Theoretical Framework- - - - - - - - 11

2.2.1 Crowding-Out Effect- - - - - - - - 11

2.2.2 Keynesian Twin-Deficit Theory-       -        -           -        -         -        14

2.2.3 Ricardian Equivalence Theory-        -         -          -         -         -        18

2.2.4 Monetarist Theory-      -           -        -        -         -         -         -         21

2.3 Empirical Literature-      -        -        -         -         -         -         -         34

2.3.1 Empirical Studies Outside Nigeria-            -          -          -        -         34

2.3.2 Empirical Studies from Nigeria- - - - - - 41

2.3.3 Observed-Gap from Empirical Literature- - - - - 52

2.4 Summary of Reviewed Literature- - - - - - 53

REFERENCES- - - - - - - - - - 58

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design- - - - - - - - - 65

3.2 Nature and Sources of Data- - - - - - - 65

3.3 Method/Techniques of Data Analysis- - - - - - 66

3.4 Model Specification- - - - - - - - 67

3.4.1 Theoretical (A Priori Expectations)- - - - - - 68

3.5 Measurement/Description of Variables- - - - - 69

3.5.1 Description of Dependent Variable- - - - - - 69

3.5.2 Description of Independent Variables- - - - - - 69

3.5.3 Description of Control Variables- - - - - - 70

REFERENCE- - - - - - - - - - 72

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction- - - - - - - - - 73

4.2 Data Presentation- - - - - - - - - 73

4.3 Data Analyses- - - - - - - - - 74

4.4 Discussion of Findings- - - - - - - - 86

REFERENCE- - - - - - - - - - 88

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary- - - - - - - - - - 90

5.2 Conclusion- - - - - - - - - - 92

5.3 Recommendations- - - - - - - - 93

5.3.1 Contributions to Knowledge- - - - - - - 93

5.3.2 Recommendations for Further Studies- - - - - 94

REFERENCE- - - - - - - - - - 95

APPENDIX- - - - - - - - - -