Benue State University, Makurdi

Impact of Deficit Financing Sources on Unemployment in Nigeria: A Dynamic Autoregressive approach

Iortyer A. Dominic, Okoro E. Shuaibu and Idoko Ele- Ojo

Abstract

The study examined how deficit finance sources affect the amount of unemployment in Nigeria using an Autoregressive Distributed Lag technique from 1986 to 2022. The main aim of the study was to identify sources of deficit finance and their impact on unemployment in Nigeria. The particular aims are to analyze the immediate and long-term effects of external debt and domestic debt on unemployment in Nigeria. I analyze the effects of inflation and real economic growth on unemployment in Nigeria. The study employed the Autoregressive Distributed Lag (ARDL) model estimate technique. The study found that government deficit financing sources, including external debt and domestic debt, had significant effects, both positive and negative, on the unemployment rate in Nigeria during the study period, both in the short term and long term. The report advised that government at all levels in the country should uphold fiscal discipline to effectively use government budget deficit funding sources to enhance economic growth and minimize unemployment.

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