ABSTRACT

The study investigated the relationship between twin deficit and manufacturing sector of Nigerian economy for the period of 34 years (1981 to 2015). The study adopted the time series data using the OLS estimation technique to analyze the data. The model was estimated using a linear specification methodology. It was discovered Current account deficit and fiscal deficit exerts a negative and significant relationship with manufacturing output in Nigeria while Real Gross Domestic Product has a positive and significant relationship with manufacturing output in Nigeria. The study recommended that Government should endeavor to live within its means. Persistent budget deficit may lead to chronic current account disequilibrium which may further inhibit economic growth. Government must ensure that it pursues fiscal policies that align expenditure with revenue.