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- Title
Twin Deficit in Nigeria: A Re-Examination.
- Authors
Amaghionyeodiwe, Lloyd Ahamefule; Akinyemi, Opeyemi
- Abstract
This study re-examines the long run relationship between the budget and current account deficits in an oil-dependent open economy like Nigeria using a multivariate Granger causality test within the VECM framework. This result confirmed the existence of a long run relationship between the budget and current account deficit in Nigeria, thus supporting the Mudell-Fleming theory and refuting the Ricardian Equivalence Hypothesis (REH). The causality result indicates no causality between budget deficit and current account while the current account deficit causes budget account deficit. This implies that reduction in the current account deficits will help reduce the "twin deficit" dilemma.
- Subjects
NIGERIA; BUDGET; BALANCE of payments deficit; PUBLIC finance; GRANGER causality test; VECTOR error-correction models; RICARDIAN equivalence theorem
- Publication
Journal of Economic & Social Studies (JECOSS), 2015, Vol 5, Issue 2, p149
- ISSN
1986-8499
- Publication type
Article
- DOI
10.14706/JECOSS15528