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The Economics and Finance Letters

December 2020, Volume 7, 2, pp 112-121

Deficit Financing Asymmetry and Nigerias Economic Growth: A Nonlinear Autoregressive Distributed Lag Approach

Mohammed, I.D.


Sule, Abubakar

Mohammed, I.D. 1
Sule, Abubakar 2

  1. Monetary Policy Department, Central Bank of Nigeria (CBN), Abuja, Nigeria. 1

  2. Department of Economics, Kogi State University, Anyigba-Nigeria. 2

Pages: 112-121

DOI: 10.18488/journal.29.2020.72.112.121

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Article History:

Received: 04 June, 2020
Revised: 07 July, 2020
Accepted: 31 July, 2020
Published: 27 August, 2020


This study examine deficit financing asymmetry and Nigeria’s economic growth using time series quarterly data covering the period of 2000 to 2019. The study is hinged on Keynesian, Monetary Neo-Liberal theoretical postulations to ascertain the asymmetry and significance relationship between deficits financing and Nigerian economy. The study applied Non-Linear Autoregressive Distributed Lag (NARDL) technique. The estimated NARDL model reveals that both positive and negative deficits financing innovation reduces economy growth; however, the impact of negative deficit financing innovation is greater than the positive innovation. In addition, the Nigerian economy is also driven by weak institutions and low level of savings culture, which is evidence in negative signs of both coefficients of savings and quality institution. This study therefore lend support for fiscal governance through review of laws that made the existing institutions and further strengthen in line with global best practice to guide and monitor the implementation of deficit financing in investment-oriented projects that can translates to better standard of living of the citizenry.
Contribution/ Originality
This study examined deficit financing asymmetry and Nigeria’s economic growth using time series quarterly data covering the period of 2000 to 2019. This study uses NARDL model against other techniques in the reviewed empirical works and the findings reveals that both positive and negative deficits financing innovation reduces economy growth. In addition, the Nigerian economy is also driven by weak institutions and low level of savings culture, which is evidence in negative signs of both coefficients of savings and quality institution.


Deficit financing, Economy, Institution, Consumer price index, Nonlinear ARDL.


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This study received no specific financial support.

Competing Interests:

The authors declare that they have no competing interests.


Both authors contributed equally to the conception and design of the study.

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