Impact of Deficit Financing on Economic Growth in Nigeria

Deficit Financing is an important method of promoting economic growth and development. In the Keynesian analysis, it has been advocated that deficit financing could be adopted in order to tackle the problem of inflationary-unemployment in the advanced nations when there is recession or depression. In the post Keynesian analysis, it has also been advocated that deficit financing could be applied to the some of the problems of developing nations, especially the problem of unemployment. The Keynesian school of thought advocates the expansion in government expenditures even above current income, particularly during depressions. According to them, the main cause of depression is lack of spending by the public sector when the economy suffers from lack of aggregate demand such as the great depression of 1929 to 1932 and most recently, the 2008 Global Financial and Economic crisis. This will increase the demand for productive output and to reduce the level of unemployment (Anyanwu and Oaikhenan, 1995, Ogboru, 2006).