PUBLIC DEBT AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM NIGERIA – Caleb University Journal

PUBLIC DEBT AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM NIGERIA

Publication Date : 13/06/2024

DOI: 10.26772/cijds-2024-07-01-04


Author(s) :

Aminu, Abubakar Mikailu.


Volume/Issue :
Volume 7
,
Issue 1
(06 - 2024)



Abstract :

This study investigates the influence of public debt on economic growth in Nigeria, employing the autoregressive distributed lag (ARDL) model of cointegration and analysing annual time series data spanning from 1980 to 2022. The empirical findings reveal that in the long run, external debt exerts a positive and significant impact on economic growth. This suggests that external debt holds substantial economic potential to drive growth in Nigeria throughout the analysed period. However, debt service payments have a significant adverse effect on growth, both in the long run and the short run. Consequently, the study recommends that the government should ensure borrowed external funds are allocated to productive investments to achieve its desired objectives. Specifically, Projects financed through government borrowing should undergo thorough assessment, evaluating their technical feasibility, financial viability, and economic desirability before committing funds, borrowing should be allocated towards financing productive infrastructure projects and initiatives that enhance productivity, thereby potentially offsetting the costs associated with servicing the debt


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