Deficit Financing Components, Inflation and Capital Formation in Nigeria: Evidence from a Direct and Indirect Analysis

Deficit financing occasioned by low domestic savings and capital formation, have characterised the Nigerian economy since 1970s with attendant increase in inflation. Empirical studies on Nigeria shown that deficit directly affects inflation formation when examined independently. However, little attention has been paid to a simultaneous investigation of direct indirect effects components for Nigeria. Consequently, this study was designed fill gap through time series data instrumental variable approach. The found indirectly impacted from 1970 2017; as against reported empirical studies. Also, had adverse effect formation. Hence, better synergy fiscal monetary policies effectively tame ensure growth recommended.