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Budget Deficits, Money Growth and Price Level in Nigeria
Author(s) -
Chukwu Jude Okechukwu
Publication year - 2013
Publication title -
african development review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.654
H-Index - 32
eISSN - 1467-8268
pISSN - 1017-6772
DOI - 10.1111/1467-8268.12042
Subject(s) - economics , money supply , deficit spending , causality (physics) , monetarism , cointegration , price level , monetary economics , moneyness , monetary policy , granger causality , inflation (cosmology) , macroeconomics , econometrics , debt , physics , quantum mechanics , theoretical physics
The study investigates the long‐run causal relationship amongst budget deficits, money growth and price level for Nigeria between 1971 and 2008 inclusive. The empirical findings predict a long‐term cointegrating relationship with unidirectional causality running from budget deficit to money supply growth and then from money supply growth to price level in the Toda and Yamamoto ([Toda, H. Y., 1995]) sense. Thus, the Sargent and Wallace ([Sargent, T., 1981]) ‘Unpleasant Monetarist Arithmetic’ hypothesis holds for Nigeria.