Impact of Budget Deficit and Interest Rate on Inflation in Nigeria Economy 1980 - 2023: An Inverse Relationship Analysis

This paper investigates an inverse relationship analysis of impact of budget deficit and interest on inflation in Nigeria economy between 1980 and 2023. The paper was predicated on “Overhang Debt Theory.” Materials for the study were obtained from secondary sources, which include Central Bank of Nigeria statistical bulletin, textbooks and published journals. The data for analysis was sourced from CBN's statistical bulletin. Augmented Dickey Fuller, unit root test and Vector auto regression model were adopted in the data analysis.. The results revealed that there was evidence of stationarity among the variables applied in this study. Thus, an increase in budget deficits will affect interest and inflation rates in Nigeria.