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Public Debt and Inflation Nexus in Nigeria: An ARDL Bounds Test Approach

A.U. Aimola () and N.M. Odhiambo ()
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A.U. Aimola: University of South Africa
N.M. Odhiambo: University of South Africa

Working Papers from African Economic and Social Research Institute (AESRI)

Abstract: Inflationary tendencies of public debt have been the cause of an unsettling debate among policymakers in Nigeria. Using the autoregressive distributed lag (ARDL) framework, this study attempts to investigate the impact of total public debt on inflation in Nigeria for the period 1983– 2018. The cointegrating regression results reveal evidence of a stable long-run relationship among inflation, total public debt, money supply, interest rate, economic growth, trade openness, and private investment in the presence of structural breaks. Empirical results show that the impact of public debt on inflation is statistically insignificant, irrespective of whether the regression was in the short or the long run. Hence, the study concludes that inflation in Nigeria could be driven by other factors other than public debt.

Pages: 32 pages
Date: 2021-05, Revised 2021-05
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https://aeri.co.za/RePEc/afa/afa-wpaper/AESRIWP09.pdf Revised version, 2023 (application/pdf)

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