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Using a time series data the study employed Granger-Causality and Vector Auto-Regression (VAR) techniques in the analysis of the data collected. This study assessed the effects of deficit financing on trade balance in Nigeria from 1980 -2008. Our short-run dynamic result indicates a positive relationship between Deficit financing and Trade balance (surplus). While the long-term result posits that an increase in deficit financing diminishes trade deficit in Nigeria.
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