Title: Fiscal Deficit, Unemployment, and Price Stability in Nigeria: An Empirical Analysis
Authors: Ebikabowei Biedomo ADUKU, Felix AMABIENIMIGHA
Volume: 9
Issue: 12
Pages: 12-20
Publication Date: 2025/12/28
Abstract:
The study examines the impact of fiscal deficit on unemployment and price stability in Nigeria from 1981 to 2022 using the ordinary least square technique. Fiscal deficit was measured by the budget deficit as a percentage of GDP, while unemployment was measured by the unemployment rate, and price stability was measured using the consumer price index. Control variables included were real GDP growth, population growth, domestic investment, and real interest rates. It was found that fiscal deficit had a negative and insignificant impact on unemployment, and a positive and insignificant impact on price stability. Real GDP growth had negative and significant impact on unemployment and price stability, while population growth had a positive and significant impact on unemployment and price stability. Domestic investment had a negative and insignificant impact on unemployment, while real interest rate had a positive and significant impact on price stability. It was concluded that there was no statistically significant impact of fiscal deficits on either unemployment or price stability in Nigeria. Redirecting fiscal deficits towards productive capital expenditures, like infrastructure and industrial development, should be the government's top priority in order to promote employment and price stability. To avoid unnecessary spending and reduce the inflationary pressures, it is also crucial to improve fiscal restraint and public spending efficiency.