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Public Debt Spiral and Domestic Investment in Nigeria

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Listed:
  • Emmanuel Chinanuife
  • Paul Eze
  • Ozoemena S. Nwodo

Abstract

The nature of Nigeria economy is such that borrowing has become the business of every government in power. Most often, in order to finance the deficit in the budget, the government would resolve to borrowing. However, there is growing concern on how long it would take Nigeria government to reduce the rate of borrowing. Some theorist argued that borrowing is not bad if borrowed fund is used productively. It is to this assertion that this study sorts to investigate public debt spiral and the level of public investment in Nigeria. Using quarterly time series data ranging from 1981 to 2016 and the ARDL methodology. The result showed that public debt has negative and statistical significant impact on public investment in Nigeria. That is, public debt crowds out public investment in Nigeria. The study therefore recommends among others that greater percent of public borrowing should be invested in order to reduce future borrowing in Nigeria. Also, the government should embark on internal borrowing instead of external to overcome exchange rate fluctuation problem.

Suggested Citation

  • Emmanuel Chinanuife & Paul Eze & Ozoemena S. Nwodo, 2018. "Public Debt Spiral and Domestic Investment in Nigeria," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(1), pages 153-161, March.
    • Handle: RePEc:khe:scajes:v:4:y:2018:i:1:p:153-161
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    References listed on IDEAS

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    5. Adel M. EL-MAHDY & Neveen M. TORAYEH, 2009. "Debt Sustainabiliy And Economic Growth In Egypt," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 9(1).
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    Cited by:

    1. Chima Kenneth Anachedo & Amalachukwu Chijindu Ananwude & Dr Felix Nwaolisa Echekoba & Andrew Izuchukwu Nnoje, 2022. "Effect of Public Debt on the Economic Growth of Nigeria (1986 – 2020)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 6(5), pages 794-800, May.
    2. Abdulkarim Yusuf & Saidatulakmal Mohd, 2023. "Nonlinear effects of public debt on economic growth in Nigeria," SN Business & Economics, Springer, vol. 3(4), pages 1-31, April.

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    More about this item

    Keywords

    Public debt; debt servicing; investment; domestic;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt
    • N17 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Africa; Oceania

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