IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 2 NO. 3 2016

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Intergenerational Causality Effect of External Debt on Performance of the Nigeria Economy (Revised Version)

Monogbe Tunde G.

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Abstract

This research work empirically investigate the intergeneration effect of foreign borrowed fund on performance of Nigeria economy using data from the CBN statistical bulletin spanning from 1981 – 2014 with the help of some estimating tools which includes among others OLS, Phillip Perron test, co-integration test, and granger causality test to investigate the direction of causality between the variable used in the process of research. Finding reveals from the result of the OLS that MLD and TMS which are proxy for external debt has positive and significant relationship to economic growth except for BLD which reveals a significant but negative relationship with economic growth which suggests that using borrowed fund for infrastructural, production and manufacturing project will stimulate economic performance and hence promote economic growth in the economy and reduce the fear of transferring the present debt to the future generation. We hereby recommend that when government is increasing her spending through (external debt), they must be meticulous about the sector of the economy in which such advances is channel towards. As Increase in government spending centred at agriculture, manufacturing, entrepreneur and productive sector of the economy will definitely stimulate economic growth and hence crowd in more investment. While increase in government spending on the non-productive sector (current consumption) of the economy will spontaneously crowd out private saving, investment and increase the intergenerational effect in Nigeria.

keywords:

MDL, BLD, GDP,TMS

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