Domestic Debt, Price Stability and Economic Growth in Nigeria

Nkemjika Nwosu., Uduakobong Sammy Inam. and Paul Atanda Orebiyi
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Nkemjika Nwosu.: Department of Economics, University of Uyo, Ikpa Road, PMB 1017, Akwa Ibom State, Nigeria
Uduakobong Sammy Inam.: Department of Economics, University of Uyo, Ikpa Road, PMB 1017, Akwa Ibom State, Nigeria
Paul Atanda Orebiyi: Department of Economics, University of Uyo, Ikpa Road, PMB 1017, Akwa Ibom State, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 7, 648-662

Abstract: This study analyses the relationship between domestic debt, price stability and economic growth in Nigeria using annual data covering the period 1980 to 2023. Specifically, the study investigates the long and short run effects of domestic debt on price stability and economic growth in Nigeria. The study employs the Auto- Regressive Distributed Lag (ARDL) technique and the Granger Causality test. The results reveal that domestic debt has an indirect, but insignificant impact on economic growth in the long run and indirect and significant relationship in the short run. There are no causal relations between domestic debt, inflation and economic growth in Nigeria. The study recommends that domestic debt should be invested in productive sectors of the economy and more specifically in the real sector to create employment and reduce poverty incidence in the country. Furthermore, there should be proper formulation and implementation measures that would keep the inflation rate at a level that would not have adverse effects both in the short and long runs. Also, Government and relevant monetary authorities should adopt a suitable exchange rate policy that will allow for a realistic and stable exchange rate to enhance output performance.

Date: 2024
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