The Impacts of Domestic Debt on Economic Performance in Nigeria (1970 - 2013)

Adam A. James, Sule Magaji, Anthony A. Ayo, Ibrahim Musa


Nigeria, like many developing economies, is plagued by increasing government expenditures, unmatched by government revenues. This has resulted in the need for government borrowing. Hence, an investigation of the impacts of National Debt on Economic performance is highly essential. This research work examined the impact of Domestic Debt on Economic performance in Nigeria. The data used were secondary source and the period of analysis covered 1970 – 2013. The models were estimated via the least square(s) method to ascertain the relationship between Domestic Debt and Economic growth, Inflation and Unemployment, after stationary test was conducted on the data. Multiple regression analysis was used to analyze the effect of Domestic Debt on inflation, Economic growth and unemployment.  Domestic debt has a negative but insignificant impact on economic growth in Nigeria, Domestic debt also has a negative impact on unemployment, and however, the relationship is not statistically significant. The result also shows that there exist a positive and significant relationship between Domestic debt and inflation in Nigeria in the period under consideration. Hence, for national debt to benefit the economy, it must be a productive debt and an efficient debt management scheme should be put in place.

Keywords: Domestic Debt, Economic growth, Unemployment, Inflation,   cointegration, Stationary.

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