IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 6 NO. 1 2020

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Public Debt and Economic Development in Nigeria

Efanga Udeme Okon AND Etim Raphael S. & Jeremiah Mfon S.

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Abstract

This study was carried out to ascertain the impact of public debt on economic development in Nigeria from 1981 to 2018. Ex – post facto research design was employed; data used for analysis were elicited from Central Bank Statistical Bulletin of 2018 and World Bank Database: World Development Indicator 2018. Gross fixed capital formation was employed as the dependent variable, while foreign debt and domestic debt were utilized as proxy for public debt and exchange rate was employed as a control variable. This study employed Auto Regressive Distributed Lag (ARDL) Model to analyze data, other diagnostic tests such as; test of Normality, Auto correlation test, Heteroskedasticity test and Breusch-Godfrey Serial Correlation LM test were also carried out and they confirmed the validity and reliability of the model employed; the inferential results suggested that public debt had positive and significant impact on economic development in Nigeria. The study recommended that since both foreign and domestic debt had positive significant impact on economic development in Nigeria, government should continue borrowing to finance the national budget and achieve key macro- economic goals such as price stability, improvement in standard of living, provision of social and economic amenities amongst others, which will bring about economic development in Nigeria.

public debt, economic development, gross fixed capital formation, exchange rate, foreign debt and domestic debt

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