Twin Deficit in Nigeria: A Re-Examination

Amaghionyeodiwe, Lloyd Ahamefule and Opeyemi, Akinyemi (2015) Twin Deficit in Nigeria: A Re-Examination. Journal of Economic and Social Studies, 5 (2). pp. 149-179. ISSN 1986 – 8502, doi: 10.14706/JECOSS15528

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Abstract

Abstract: This study re-examines the long run relationship between the budget and current account deficits in an oil-dependent open economy like Nigeria using a multivariate Granger causality test within the VECM framework. This result confirmed the existence of a long run relationship between the budget and current account deficit in Nigeria, thus supporting the Mudell-Fleming theory and refuting the Ricardian Equivalence Hypothesis (REH). The causality result indicates no causality between budget deficit and current account while the current account deficit causes budget account deficit. This implies that reduction in the current account deficits will help reduce the “twin deficit” dilemma.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Journal of Economic and Social Studies
Depositing User: Mrs. Emina Mekic
Date Deposited: 14 Oct 2015 12:59
Last Modified: 29 Jan 2016 08:43
URI: http://eprints.ibu.edu.ba/id/eprint/2931

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