An Empirical Analysis of the Impact of Public Debt on Economic Growth:
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Date
2012
Authors
Obademi, O.E
Journal Title
Journal ISSN
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Abstract
This paper focuses on the impact of public debt on
economic growth using Nigeria as a case study. An
analysis of the long-run relationship and impact of debt
from the perspective of the value impact and proportional
impact was done. The value impact variables used herein
include the external debt value, domestic debt value, total
debt value and budget deficit figures. The proportional
impact variables are ratios of the value impact to the gross
domestic product (GDP). An augmented Cobb Douglas
model was used and subsequently a dynamic version
of the functional relationship was estimated using Co-
integration technique to capture the long-run impact of
debt variables on economic growth. The result showed
that the joint impact of debt on economic growth is
negative and quite significant in the long-run though in
the short-run the impact of borrowed funds and coefficient
of budget deficit is positive. In the study, the speed at
which the short-run equation converges to equilibrium in
the long-run as shown by the Error Correction Mechanism
coefficient was found to be slow. The conclusion from
this study is that though in the short-run the impact of
borrowed fund on the Nigerian economy was positive, the
impact of debt in the long-run depressed economic growth
as a result of incompetent debt management.
Key words:
Public debt; Economic growth
Description
Staff Publication
Keywords
Public Debt , Economic Growth
Citation
Obademi,O.E. (2012) An Empirical Analysis of the Impact of Public Debt on Economic Growth: Evidence from Nigeria 1975-2005. Vol.8,(4),p.154-161.