An Empirical Analysis of Fiscal Deficits and Inflation in Nigeria

The relationship between fiscal deficits and inflation has provoked considerable interest in the macroeconomics literature. While the theory postulates that fiscal deficits lead to inflation, empirical research has been less conclusive about the relationship. This paper reexamines the issue in the context of a developing country, Nigeria, using data over 1970–2006, a period of persistent inflationary trends. We adopted a modeling approach that incorporates cointegration techniques and structural analysis. The results reveal a positive but insignificant relationship between inflation and fiscal deficits in Nigeria. We did not also find any strong evidence linking past levels of fiscal deficits with inflation in Nigeria during the period. Rather, we report a positive long run relationship between money supply and inflation in the Nigerian economy, suggesting that money supply is procyclical and tends to grow at a faster rate than inflation rate. Key words: Fiscal deficit; Inflation; Cointegration; Money supply; Nigeri

5TH applied research conference in Africa

Abstract: Please refer to full text to view abstrac

EXAMINING THE EFFECT OF AGE DISTRIBUTION AND HEALTH INSURANCE BUSINESS ON NIGERIAN ECONOMIC GROWTH

This study has demonstrated new evidence sustaining the idea that age distribution and health insurance affect economic growth in Nigeria. Life table that was computed based on substantial assumptions using 1990 Nigeria population data and a death rate of 18.55%, the study examines total person-years of life contributed after attaining age x as a proxy for age distribution (Tx) and the average number of years of life remaining for a person alive at the beginning of age interval x after adjustment with life expectance rate as at the year 1990 of 3% as proxy for health insurance (Hi). To achieve the objectives, research questions and hypotheses were formulated for age distribution, health insurance and economic growth. The variables Tx, Hi and GDP were subjected to normality test as normality of data is one of the standardized requirements for any least square regression. The P-values obtained from the Ordinary Least Square regression result was used to test the formulated hypotheses at 5% level of significance and the result revealed that age distribution (Tx) and health insurance (Hi) affects economic growth in Nigeria, while the Cobb-Douglas production function model shows that as the agedistribution interval of person’s in the life table increases, there is a slight fall in economicgrowth. The Cobb-Douglas model also shows an increasing return to scale which was supported by the presence of health insurance (Hi) in the model. The study recommends age distribution and health insurance as essential variables in formulating economic growth policy