Public Debt Spiral and Domestic Investment in Nigeria
Public Debt Spiral and Domestic Investment in Nigeria

Summary/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.

• Details
• Contents