Effects of Budget Deficit on Trade Balance in Nigeria: a Simulation Exercise

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Periodical article

Title:	Effects of Budget Deficit on Trade Balance in Nigeria: a Simulation Exercise
Author:	Egwaikhide, Festus O.
Year:	1999
Periodical:	African Development Review
Volume:	11
Issue:	2
Period:	December
Pages:	265-289
Language:	English
Geographic term:	Nigeria
Subjects:	national budget terms of trade Economics and Trade international relations Inter-African Relations
External link:	https://onlinelibrary.wiley.com/doi/pdf/10.1111/1467-8268.00011
Abstract:	Using a macroeconometric model that captures the salient interrelationship between budgetary policy, domestic credit, domestic absorption and trade balance, the author examines the effects of budget deficit on trade balance in Nigeria between 1973 and 1993. Evidence from dynamic policy simulation experiments suggests that budget deficit, caused by increased government expenditures, boosts inflation and leads to a deterioration of the trade balance, irrespective of whether it is financed through bank credit or external borrowing. In order to achieve external balance in Nigeria, sound budgetary management is essential. Bibliogr., sum. in English and French.