University Links: Home Page | Site Map
Covenant University Repository

Impact of Public Debt on Economic Growth: Evidence from Nigeria

EHIKIOYA, Benjamin I. and Omankhanlen, A. E (2021) Impact of Public Debt on Economic Growth: Evidence from Nigeria. Montenegrin Journal of Economics, 17 (1). pp. 97-109.

[img] PDF
Download (374kB)


The rising debt profile of developing economies like Nigeria has remained a concern for the policymakers and other agents of the economy. Thus, this study examines the impact of public debt on economic growth in Nigeria. The study used the Johansen cointegration test, Ordinary Least Square technique and Vector Error Correction Model to analyze data sourced from the Central Bank of Nigeria, Debt Management Office, International Mone-tary Fund and the World Bank for the period 1981-2019. The study demon-strates the presence of a long-run equilibrium relationship between public debt and economic growth in Nigeria. The analysis reveals evidence of an adverse impact of public debt on economic performance for the study peri-od in Nigeria. However, the impact of the relationship is only significant with the lag variable. The study demonstrates that inflation, interest rates, oil price and investment exert influence on economic growth in Nigeria. Follow-ing the results of this study and the level of debt in Nigeria, policymakers must support private sector led investment drive for improved economic performance. Also, the government must make sure that borrowing is based on project specific needs that guarantee repayment of borrowed funds. Finally, the government must enforce good governance and institutional structures to discourage the misappropriation of resources and encourage economic growth.

Item Type: Article
Uncontrolled Keywords: Public Debt, economic growth, cointegration, inflation, equilibrium
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HG Finance
Divisions: Faculty of Law, Arts and Social Sciences > School of Social Sciences
Depositing User: Mrs Patricia Nwokealisi
Date Deposited: 30 Jun 2021 09:03
Last Modified: 30 Jun 2021 09:03

Actions (login required)

View Item View Item