
This work is licensed under a Creative Commons Attribution 4.0 International License.
Domestic Debt and Economic Growth Nexus: The Nigeria Evidence
Corresponding Author(s) : Pamogho, M.
American Journal of Economics and Business Management,
Vol. 6 No. 1 (2023): American Journal of Economics and Business Management
Abstract
Propelled by the need to promote growth in the economy, the study evaluates the effects of Domestic Debt and Economic Growth in Nigeria over the period 1981 - 2019. Secondary data were sourced from the Central Bank of Nigeria Statistical Bulletin. Domestic Debt is captured using indicators such as Federal Government Domestic Debt, Domestic Debt Servicing. Government Expenditure and Lending, while Economic growth was proxy by Gross domestic product in Nigeria. The study employed the Stationarity Test, Johansen Co-integration Test and the Parsimonious error correction model in evaluating the nature of the prevailing relationship between the underlying variables. The result revealed that the Federal Government Domestic Debt, and Domestic Debt Servicing exhibited positive and significant influence on economic growth in Nigeria. While Government expenditure is seen to have negative and insignificant influence on Gross domestic product. Lending rate showed positive and insignificant influence on economic growth in Nigeria within the period of this study. In light of the observed findings, the study recommends that projects to be financed with government borrowing should be properly appraised and their technical feasibility, financial viability and economic desirability ascertained before the funds are committed. Government should improve more on capital expenditures such as infrastructures since they are the key to growth and will reduce the cost of production and investment. Also, government and the Debt Management Office should draw up guidelines to limit the growth of future domestic debt. Effective mechanism should be put in place to ensure that any new borrowing is judiciously utilized to contribute to economic growth.
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- Abdullahi, H., Abdullahi, Y. Z., & Bello, A. A. (2012). Rebranding Nigeria's educational system for effective national economic development. Academic Research International, 3(1), 186.
- Akhanolu, I. A., Babajide, A. A., Akinjare, V. A., Tolulope, O., & Godswill, O. (2018). The effect of public debt on economic growth in Nigeria: An empirical investigation. International Business Management, 12(6), 436–441.
- Akpansung, A. O., & Gidigbi, M. O. (2020). Domestic Public Debts and Economic Growth Nexus in Nigeria: Further Empirical Evidence from Causality and Structural Breaks Analyses. Nile Journal of Business and Economics, 6(15), 39-58.
- Awe, O. O. (2012). On Pairwise Granger causality Modelling and Econometric Analysis of Selected Economic Indicators. Interstat Journals. net/YEAR/2012/articles/1208002. pdf.
- Bakare, I.O.A., Ogunlana, O.F., Adeleye, O. & Mudasiru, A. (2016). Empirical Analysis of the Effects of Domestic Debt on Nigerian Economic Growth. International Journal of Social Sciences and Humanities Reviews, 6(1), 40 – 50.
- Coccia, M. (2017). Asymmetric paths of public debt and of general government deficits across countries within and outside the European monetary unification and economic policy of debt dissolution. The Journal of Economic Asymmetries, 17(2017), 17–31. https://doi. org/10.1016/j.jeca.2016.10.003
- Egbetunde, T. (2012). Public debt and economic growth in Nigeria: Evidence from granger causality. American Journal of Economics, 2(6), 101–106. https://doi.org/ 10.5923/j.economics.20120206.02
- Ewubare, D., Nteegah, A. & Okpoi, G. (2017). Public Borrowing and the Nigerian Economy: An Autoregressive Distributed Lag Model (ARDL) Approach. The International Journal of Social Sciences and Humanities Invention 4(5), 3506-3514.
- Fasoye, K (2018). Nigeria’s Domestic Debt Profile (1980-2017).Historical Research Letter ISSN 2224-3178(Paper) ISSN 2225-0964 (online) 47
- Gordon, L. B., & Cosimo, M. (2018). Government debt in EMU countries. The Journal of Economic Asymmetries, 18(C), 1–14.
- Jhingan,M.L(2011), Money, Banking ,International Trade and Public Finance (8th ed.),Vrinda Publications(P) Ltd. B-5, Ashish Complex, ISBN978-81-8281-384-7 pp638-650.
- Johansen, S. (1988). Likelihood-based Inference in Cointegrated Vector Autoregressive Models. Oxford University Press: Oxford.
- Joy, J., & Panda, P. K. (2020). Pattern of public debt and debt overhang among BRICS nations: An empirical analysis. Journal of Financial Economic Policy, 12(3), 345–363. https://doi.org/10.1108/JFEP-01-2019-0021
- Mba, P. N., Yuni, D. N., & Oburota, C. S. (2013). Analysis of domestic debt: Implication for economic growth in Nigeria. Global Journal of Social Sciences, 12(1), 1-9.
- Mhlaba, N., Phiri, A., & Nsiah, C. (2019). Is public debt harmful towards economic growth? New evidence from South Africa. Cogent Economics & Finance, 7(1), 1603653. https://doi.org/10.1080/23322039.2019. 1603653
- Nwikina, C.G; Gbarato, L,M; and Meekor,J.J (2020).The Nigeria’s Debt –Growth Nexus: A Blessing or Burden? Economy, 7(2) 119-127
- Nwinee, B.F & Torbira ,L.L(2012). Public Financial Management In Nigeria. University of Port Harcourt Press: Port Harcourt Nigeria, ISBN:978-978-50726-4-8 pp17-173
- Okwu, A.T., Obiwuru, T.C. Obiakor, R.T., & Oluwalaiye, O.B. (2016). Domestic Debt and Economic Growth in Nigeria: Data-based Evidence. Greener Journal of Economics and Accountancy, 5(1), 001-012. CrossRef
- Pereira, A. and Xu, Z. (2000). Export growth and domestic performance. Rev. Int. Econ., 8: 60- 73. http://ideas.repec.org/a/bla/reviec/v8y2000i1p60-73.html, 2000.
- Saungweme, T., & Odhiambo, N. M. (2019). Government debt, government debt service and economic growth nexus in Zambia: a multivariate analysis. Cogent Economics & Finance, 7(1), 1622998.
- Tamunonimim, A.N. (2013). Domestic Debt and Poverty in Nigeria: An Empirical Time Series Investigation. European Journal of Accounting, Auditing and Financial Research, 5(2), 33-47.
- Thao, P. T. P. (2018). Impacts of public debt on economic growth in six ASEAN countries. Retsumeikan Annual Review of International Studies, 17(1), 63–88.
- Victoria, O. I., Mbadike, N. S., & Ikechi, K. S. (2021). Nigeria’s Domestic Public Debts and Economic Development. International Journal of Management Science and Business Administration, 7(5), 7-22.
- Yusuf, A., & Mohd, S. (2021). The impact of government debt on economic growth in Nigeria. Cogent Economics & Finance, 9(1), 1946249.
References
Abdullahi, H., Abdullahi, Y. Z., & Bello, A. A. (2012). Rebranding Nigeria's educational system for effective national economic development. Academic Research International, 3(1), 186.
Akhanolu, I. A., Babajide, A. A., Akinjare, V. A., Tolulope, O., & Godswill, O. (2018). The effect of public debt on economic growth in Nigeria: An empirical investigation. International Business Management, 12(6), 436–441.
Akpansung, A. O., & Gidigbi, M. O. (2020). Domestic Public Debts and Economic Growth Nexus in Nigeria: Further Empirical Evidence from Causality and Structural Breaks Analyses. Nile Journal of Business and Economics, 6(15), 39-58.
Awe, O. O. (2012). On Pairwise Granger causality Modelling and Econometric Analysis of Selected Economic Indicators. Interstat Journals. net/YEAR/2012/articles/1208002. pdf.
Bakare, I.O.A., Ogunlana, O.F., Adeleye, O. & Mudasiru, A. (2016). Empirical Analysis of the Effects of Domestic Debt on Nigerian Economic Growth. International Journal of Social Sciences and Humanities Reviews, 6(1), 40 – 50.
Coccia, M. (2017). Asymmetric paths of public debt and of general government deficits across countries within and outside the European monetary unification and economic policy of debt dissolution. The Journal of Economic Asymmetries, 17(2017), 17–31. https://doi. org/10.1016/j.jeca.2016.10.003
Egbetunde, T. (2012). Public debt and economic growth in Nigeria: Evidence from granger causality. American Journal of Economics, 2(6), 101–106. https://doi.org/ 10.5923/j.economics.20120206.02
Ewubare, D., Nteegah, A. & Okpoi, G. (2017). Public Borrowing and the Nigerian Economy: An Autoregressive Distributed Lag Model (ARDL) Approach. The International Journal of Social Sciences and Humanities Invention 4(5), 3506-3514.
Fasoye, K (2018). Nigeria’s Domestic Debt Profile (1980-2017).Historical Research Letter ISSN 2224-3178(Paper) ISSN 2225-0964 (online) 47
Gordon, L. B., & Cosimo, M. (2018). Government debt in EMU countries. The Journal of Economic Asymmetries, 18(C), 1–14.
Jhingan,M.L(2011), Money, Banking ,International Trade and Public Finance (8th ed.),Vrinda Publications(P) Ltd. B-5, Ashish Complex, ISBN978-81-8281-384-7 pp638-650.
Johansen, S. (1988). Likelihood-based Inference in Cointegrated Vector Autoregressive Models. Oxford University Press: Oxford.
Joy, J., & Panda, P. K. (2020). Pattern of public debt and debt overhang among BRICS nations: An empirical analysis. Journal of Financial Economic Policy, 12(3), 345–363. https://doi.org/10.1108/JFEP-01-2019-0021
Mba, P. N., Yuni, D. N., & Oburota, C. S. (2013). Analysis of domestic debt: Implication for economic growth in Nigeria. Global Journal of Social Sciences, 12(1), 1-9.
Mhlaba, N., Phiri, A., & Nsiah, C. (2019). Is public debt harmful towards economic growth? New evidence from South Africa. Cogent Economics & Finance, 7(1), 1603653. https://doi.org/10.1080/23322039.2019. 1603653
Nwikina, C.G; Gbarato, L,M; and Meekor,J.J (2020).The Nigeria’s Debt –Growth Nexus: A Blessing or Burden? Economy, 7(2) 119-127
Nwinee, B.F & Torbira ,L.L(2012). Public Financial Management In Nigeria. University of Port Harcourt Press: Port Harcourt Nigeria, ISBN:978-978-50726-4-8 pp17-173
Okwu, A.T., Obiwuru, T.C. Obiakor, R.T., & Oluwalaiye, O.B. (2016). Domestic Debt and Economic Growth in Nigeria: Data-based Evidence. Greener Journal of Economics and Accountancy, 5(1), 001-012. CrossRef
Pereira, A. and Xu, Z. (2000). Export growth and domestic performance. Rev. Int. Econ., 8: 60- 73. http://ideas.repec.org/a/bla/reviec/v8y2000i1p60-73.html, 2000.
Saungweme, T., & Odhiambo, N. M. (2019). Government debt, government debt service and economic growth nexus in Zambia: a multivariate analysis. Cogent Economics & Finance, 7(1), 1622998.
Tamunonimim, A.N. (2013). Domestic Debt and Poverty in Nigeria: An Empirical Time Series Investigation. European Journal of Accounting, Auditing and Financial Research, 5(2), 33-47.
Thao, P. T. P. (2018). Impacts of public debt on economic growth in six ASEAN countries. Retsumeikan Annual Review of International Studies, 17(1), 63–88.
Victoria, O. I., Mbadike, N. S., & Ikechi, K. S. (2021). Nigeria’s Domestic Public Debts and Economic Development. International Journal of Management Science and Business Administration, 7(5), 7-22.
Yusuf, A., & Mohd, S. (2021). The impact of government debt on economic growth in Nigeria. Cogent Economics & Finance, 9(1), 1946249.