ABSTRACT

This study examined the comparative analysis of the effect of fiscal deficit financing on economic growth of Nigeria for a period of 34 years (1981-2015) was examined using a time series data. In order to achieve the objective of the study, econometric model was estimated using Ordinary Least Square (OLS). In the model, Real Gross Domestic Product which was used as a proxy for economic growth was regressed against capital expenditure, recurrent expenditure and fiscal deficit. The study revealed that recurrent expenditure exerted a positive significant relationship on the economic growth of Nigeria for the period under study. The study also found out there exist a negative insignificant relationship between fiscal deficit and economic growth in Nigeria for the period under study. Finically, the study revealed that capital expenditure has a negative insignificant relationship on the economic growth of Nigeria for the period under study. Based on the findings of the study, the study recommended that government should be transparent in the Execution of Capital Projects in Nigeria and that government should be strict in awarding of projects so as to ensure a quality execution by the contractor and to ensure a full follow-up on the capital project while it is on-going. This would ensure that the value for the money expended is gained and that profligate spending is eliminated.