ANALYSIS OF THE GROWTH IMPLICATIONS OF NIGERIA’S DEFICIT FINANCING BEHAVIOUR
The study investigated the effects of deficit financing on Nigeria's economic growth using time series data from 1980 to 2021. Gross domestic product (GDP) was used as the dependent variable to represent economic growth, while domestic debt (DMD), external debt (EXD), budget deficit (BDF), and external reserve (ETR) served as independent variables. Data was sourced from the 2021 Central Bank of Nigeria statistical bulletin since the 2022 edition hasn't been released. The autoregressive distributed lag model was utilized for estimation, and we found that in the short term, domestic debt was observed to notably influence economic growth. This conclusion is drawn from the t-statistics value, which had a p-value below the 0.05 significance level. Similarly, in the long term, domestic debt significantly impacted the growth of the Nigerian economy, as indicated by the t-statistics value being under the 0.05 significance threshold. The t-statistics for External Debt were not statistically significant, as indicated by the p-values exceeding the 0.05 significance threshold. This suggests that, in the short term, external debt didn't influence Nigeria's economic growth. Similarly, in the long term, the t-statistics for external debt remained insignificant, implying that external debt didn't affect Nigeria's economic progression. In the short run, the t-statistics for the budget deficit were statistically significant, as the p-value was below the 0.05 threshold. This indicates that the budget deficit affected Nigeria's economic growth during this period. On the other hand, in the long run, the t-statistics for the budget deficit showed a p-value exceeding 0.05, suggesting that over a longer duration, the budget deficit did not influence Nigeria's economic growth. The Nigerian government should establish a robust debt management strategy. This approach should emphasize cautious borrowing, judicious application of domestic debt, and consistent evaluation of debt viability to prevent overwhelming debt loads and guarantee continued economic development.