Government Deficits and Money Growth

Application of Bootstrap Simulation and Asymmetric Causal Approach to Fiscal Deficit-Inflation Nexus

“…Also, some empirical studies have established a two-way causality between the two variables (Chimobi & Igwe, 2010; Onwiduokit, 1999; Oseni & Sanni, 2016). Still others show evidence of weak or no causal link ( Ahking & Miller, 1985; Akgay et al, 2001; Barro, 1989; Ezeabasili et al, 2012; Faini, 1991; Landon & Reid, 1990; McMillin & Beard, 1982; Niskanen, 1978). Aside from the inconclusiveness of previous studies, the issues of persistent budget deficits and double-digit inflation rates are fundamental causes of macroeconomic instability (Olomola & Olagunju, 2004; Olubiyi & Bolarinwa, 2018) in Nigeria’s economy and it has continued to be a subject of debate among policy makers and scholars alike.…”

An Empirical Investigation Into the Budget Deficit ‐ Inflation Nexus in South Africa

“…Catao and Terrones (2001) using panel data for 23 emerging market countries find positive and statistically significant relationships between budget deficits and inflation. However, Niskanen (1978), Barro (1978), Miller (1983), McMillin and Beard (1982), Darrat (1988, 1989), Landon and Reid (1990), Ahking and Miller (1985) argue that budget deficits are not inflationary. Abedian and Abrahams (1996a;1996b) and Akinboade, Niedermeier and Siebrits (2002) suggest that fiscal policy has a limited effect on the inflationary process in South Africa because of the availability of 2003 SAJE v71(2) p284 developed financial markets for central government securities.…”