Public Debt and Economic Growth: Empirical Evidence from Nigeria

Callistus Tabansi Okeke, Chinwe Ann Anisiobi and Chinwe Monica Madueke
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Callistus Tabansi Okeke: Department of Economics, Nnamdi Azikiwe University Awka, Nigeria
Chinwe Ann Anisiobi: Department of Economics, Nnamdi Azikiwe University Awka, Nigeria
Chinwe Monica Madueke: Department of Economics, Nnamdi Azikiwe University Awka, Nigeria

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 3, 705-718

Abstract: This study examined the impact of public debt on economic growth in Nigeria using annual secondary data from 1981 to 2021 and the Auto-Regressive Distributed Lag technique. The variables used in the study were real gross domestic product (RGDP), which is the proxy for economic growth, gross fixed capital formation (GFCF), external debt (EXDT), exchange rate (EXCR), domestic debt (DODT) and debt service repayment (DSRT). The results of the findings show that the past value of RGDP, GFCF, EXDT and DSRT have positive impact on economic growth in Nigeria. Also, EXCR and DODT have negative impact on economic growth in Nigeria. Judging from the p values, the lagged value of RGDP, GFCF, EXDT and DSRT are statistically significant as their p values are lower than critical values at 5 percent level of significance, while EXCR and DODT have no significant impact on economic growth in Nigeria. Based on the findings, the study recommends that government should formulate and effectively implement policy that would boost domestic revenue generation by broadening the revenue base, improving capacity to tax and curtailing ineffective government spending. Also, borrowed funds should be utilized for the diversification of the productive base of the economy.

Date: 2023
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