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Public Debt and Economic Growth in Nigeria: An Empirical Analysis

Monday A. Gbanador, Mavis B. Madu

Abstract

The study examines the nexus between public debt and economic growth in Nigeria. Adopting the ex-post facto research design, quarterly time series data from 2017 to 2023 were sourced from the CBN Statistical Bulletin. The Augmented Dickey Fuller and Phillips-Perron (PP) methods were used to test for unit roots. The data were analyzed using the Johansen cointegration test, the parsimonious error correction model, and the fully modified least squares. Also, the Breusch-Pagan-Godfrey test for heteroskedasticity, the histogram normality test, and the Cusum test were used for the post-estimation diagnostic tests. The results indicated that Treasury bonds , Federal government bonds , and External debt have negative and insignificant effects on the Gross Domestic Product while Domestic debt has a positive but insignificant effect on the GDP at 5% level of significance. Therefore, the study concludes public debt does not significantly influence economic growth in Nigeria. Finally, the study recommends that policymakers should conduct a thorough assessment of the Treasury bond issuance strategy to ensure it aligned with the nation’s development objectives.

Keywords

Domestic debteconomic growthexternal debtJohansen CointegrationPublic debt

References

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