THE RELATIONSHIP BETWEEN BUDGET DEFICIT AND INTEREST RATE: EVIDENCE FROM NIGERIA
Journal Title: European Journal of Business and Social Sciences - Year 2013, Vol 2, Issue 1
Abstract
This research empirically examines the relationship between budget deficit and interest rate in Nigeria using Vector Error Correction model (VECM) for the period of 1970:1-2010:4. In the long run co-integrating equation, budget deficit reported a positive and significant impact on interest rate implying that a high budget deficit will increase interest rate in the country. The result supported the Keynesian proposition. Also the evidence from Johansen co-integration result indicates that there is a long run relationship between budget deficit and interest rate. From these aforementioned findings, this research suggests appropriate monetary- fiscal policies mix should be pursued. These include among other things, the right combination of appropriate internal- external debt ratio, the ways and means and bond to finance budget deficit in the country with close monitoring of rate of inflation.
Authors and Affiliations
Joseph Chukwudi Odionye| Department of Economics, Rhema University Aba, Abia State,Nigeria. josephodionye@yahoo.com +2348037629881, Uma, Kalu Ebi| Department of Economics, Federal University Ndufu-Alike, Ikwo, Ebonyi State, Nigeria. +2348036061790
Keywords
Related Articles
- EP ID EP10257
- DOI -
- Views 375
- Downloads 17
THE INFLUENCE OF BLENDED LEARNING ON ENTREPRENEURIAL SELF-EFFICACY OF UNIVERSITY STUDENTS
The proliferation of Entrepreneurship Education (EE) in Africa universities calls for an investigation on the suitability of the pedagogies being used. The study investigated how blended learning which entails differe...
POSITION OF THE INJURED PARTY IN KOSOVO CRIMINAL PROCEDURE
Injured party shall be considered the person who has suffered any damage from the commission of a specific criminal offense. The injured party in criminal proceedings has the capacity of a party, but which in essence...
EFFECT OF ACCRUALS QUALITY ON SEGMENTAL COST OF CAPITAL IN THE KENYAN EQUITY SECURITIES’ MARKET
This study uses a mixed research design to test the effect of segmental accruals quality on the cost of capital of the companies quoted in the various non-financial institutions segments of the Nairobi Securities Exch...
FINANCIAL PERFORMANCE MEASUREMENT COMPARATIVE STUDY ON THE AVAILABILITY AND PROFIT OF SATURN PLC DURING THE YEARS 2010 – 2014
The present study shows things that lead to the establishment of a clear comparison between availabilities and profit. The main purpose of this work is to better reflect the results of Saturn PLC., depending on the re...
RELATIONSHIP BETWEEN SUCCESS FACTORS AND ENHANCED WORK PERFORMANCE OF EDUCATED WOMEN ENTREPRENEURS IN ENUGU URBAN CITY, NIGERIA
The paper examined the relationship between success factors and enhanced work performance of educated women entrepreneurs in Enugu urban city. It defines educated women entrepreneurs as women university graduates that...