ABSTRACT

The study investigated the impact of twin-deficit on output growth in the Nigerian economy for the period 1981-2018 with specific objectives namely; to determine the impact of fiscal deficit on the economic growth of Nigerian economy, to evaluate the impact of current account deficit on the economic growth of Nigerian economy and ro determine the impact of budge/ deficit on the economic growth of Nigerian economy. The specified model was estimated using the Ordinary Le. ast Square w. ith the help of the Error Correction Model to determine the level of impact that one variable has on the other. While E-views I O statistical software was employed in computing the result, time series data were obtained from World Bank national accounts data and OECD National Accounts data files and the study established Budget deficit (BD) had a negative relationship with RGDP and was insignificant at 5% level of significance, Fiscal Deficit (FD) . had a positive relationship with RGDP and was significant at 5% level of significance while Current Account Deficit (CAD) had a negative relationship with RGDP and was statistically significant at 5% level of significance and finally. Broad Money Supply (LM2) had a strong positive relationship with RGDP and statistically significant at 5% level of significance. Based on' the findings, the study recommended that fiscal policies should be employed to correct the current account deficit. This is because the reduction in budget deficit would trigger the inflation rate, which can lead to more uncertainties in the economy. Furthermore. instead of focusing on fiscal policies to correct external deficit, the government should focus more on reducing its deficit by policies that focus more on investments and will ultimately lead to inclusive economic growth in the long run.