EconPapers    
Economics at your fingertips  
 

BUDGET DEFICITS, EXTERNAL DEBT AND ECONOMIC GROWTH IN NIGERIA

Tokunbo Osinubi () and O.E. Olaleru ()

Applied Econometrics and International Development, 2006, vol. 6, issue 3

Abstract: The necessity for governments to borrow in order to finance a deficit budget has led to the development of external debt. This study examines how the use of budget deficits as an instrument of stabilization leads to the accumulation of external debt with the attending effects on growth in Nigeria between 1970 and 2003. By synthesizing a relationship between budget deficits and external debt the study shows the implications on economic growth of conducting a fiscal policy within the contexts of debt stabilization and debt sustainability. The results of the econometric analysis confirm the existence of the debt Laffer curve and the nonlinear effects of external debt on growth in Nigeria. The study concludes that if debt-financed budget deficits are operated in order to stabilize the debt ratio at the optimum sustainable level debt overhang problems would be avoided and the benefits of external borrowing would be maximized.

Keywords: Debt Overhang; Debt Service Burden; Debt Sustainability; Debt Stabilization; External Debt; Optimal Debt Stock; Economic Growth; Nigeria (search for similar items in EconPapers)
Date: 2006
References: Add references at CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

Downloads: (external link)
http://www.usc.es/economet/reviews/aeid6313.pdf
No.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eaa:aeinde:v:6:y:2006:i:3_13

Ordering information: This journal article can be ordered from
http://www.usc.es/economet/info.htm

Access Statistics for this article

More articles in Applied Econometrics and International Development from Euro-American Association of Economic Development
Bibliographic data for series maintained by M. Carmen Guisan ().

 
Page updated 2023-06-15
Handle: RePEc:eaa:aeinde:v:6:y:2006:i:3_13