Budget deficits in Nigeria have a significant impact on the economy. They positively affect economic growth and public investment, but negatively impact private investment. The study used various economic indicators to analyze the effects of budget deficits over a 37-year period. It was found that government budget deficits do not crowd out investment, and there is a causal relationship between budget deficits and economic growth, private investment, and public investment. To ensure economic stability, the government should maintain fiscal discipline and focus on investing in productive sectors of the economy.