ABSTRACT

The policy of deficit budgeting had grown tremendously in Nigeria between 1985 and 2015.The essence was to help accelerate the growth of capital in Nigeria using the policy of deficit budgeting as formulated by Keynes. This work is centered on budget deficit and current account balance in Nigeria. Between the period of 1985-2015 and secondary data obtain from the CBN statistical bulletin and the Federal of Bureau of Statistics and Bureau of labor statistics USA were used. The statement of problem and the broad objective of this study is to determine the effect, relationship and causal relationship between budget deficit and current account balance in Nigeria. And the current account balance (CB) was used as the dependent variable while producer price for home and rest of the world (HPP,WPP ), real gross domestic product for home and rest of the world (RGDP,WDGP), exchange rate (EXCH), and budget deficit (BD) were the dependent variables employed. And also E-view package was used in running the regression the various tests were conducted for stationarity, long-run and short-run equilibrium and casualty and this test include the Unit root test, co-integration test and the granger casualty test. And the result showed that there is an inelastic relationship between current account balances, budget deficit, exchange rate and the real gross domestic product. And also budget deficit have a negative effect on the current account balance.