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This study aims to explore the relationship between fiscal deficits and inflation in Nigeria, focusing on short-run and long-run dynamics.

June 3, 2026Open Access

Fiscal Deficit and Inflation: Evidence from the Nigerian Economy

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This study aims to explore the relationship between fiscal deficits and inflation in Nigeria, focusing on short-run and long-run dynamics.
Utilized Autoregressive Distributed Lag (ARDL) model for analysis
Conducted Granger causality tests to determine causal relationships
Analyzed data on fiscal deficits, inflation, real GDP, and exchange rates.
Inflation shows strong persistence, influenced by past values (p<0.05)
Positive impact of fiscal deficits on inflation at second lag, HR=2.5, p=0.03
Significant negative relationship between fiscal deficits and inflation in the long run, indicating potential for price stability.

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Randomized trial examines inflation dynamics in Nigeria, suggesting improved fiscal management is key to stability.

Ekong et al. (2026) studied this question.

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