An Error Correction Model Analysis of the Effect of Total External Debt on the Nigerian Economy (1980–2015)

William Chimee Nwaoha, Chukwu Agwu Ejem, Charles Chukwudinma Egwu, Patience Nnenna Ugoji-Eke and Chidinma Elizabeth Nwabeke
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William Chimee Nwaoha: Adjunct-Lecturer Dept. of Economics, Institute of Ecumenical Education, Enugu in Affiliation with Enugu State University of Science & Technology (ESUT), Nigeria
Chukwu Agwu Ejem: Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria
Charles Chukwudinma Egwu: Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria
Patience Nnenna Ugoji-Eke: Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria
Chidinma Elizabeth Nwabeke: Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria

International Journal of Economics and Financial Research, 2017, vol. 3, issue 8, 119-129

Abstract: This study used error correction model (ECM) to analyse the effect of total external debt (TED) on the Nigerian economy proxied by gross domestic product (GDP) during the period 1980-2015. The data such as TED and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin. The result of the finding revealed that total external debt exerts negative and significant influence on GDP. This implies that, as total external debt increases, GDP also decreases and vice versa. Therefore, the researcher recommends that any external loan obtained by the government should be channelled to productive projects that yield high on returns on investment rather than allocating the fund to finance dead-weight debt, hence, engendering sustainable economic growth in the economy.

Keywords: GDP; TED; ADF; ECM. (search for similar items in EconPapers)
Date: 2017
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