EXAMINING THE EFFECT OF GOVERNMENT DEBT ON ECONOMIC GROWTH IN NIGERIA USING THE AUTOREGRESSIVE DISTRIBUTED LAG APPROACH
DOI:
https://doi.org/10.60787/jnamp.vol73no.739Keywords:
Government Debt, Annealing, Time Series, Autoregressive Distributed Lag (ARDL)Abstract
Many economies rely on borrowing as a source of funds. Government debt plays an important role in shaping economic growth, particularly in developing economies. This study examined the relationship between public debt and economic growth in Nigeria using annual time-series data from 1990 to 2022. Economic growth was measured using Real Gross Domestic Product. The Autoregressive Distributed Lag (ARDL) modelling approach was employed. The Augmented Dickey–Fuller (ADF) test was employed to determine the stationarity properties of the variables, while the ARDL bounds test was applied to establish whether a long-run equilibrium relationship existed among them. An Error Correction Model (ECM) was subsequently applied to capture short-run dynamics. The ADF results established stationarity of the variables. The ARDL estimates revealed no short-run effect of borrowing on economic growth. However, a long-run equilibrium between both variables was confirmed from the bounds test. The study concludes that while government borrowing does not significantly stimulate short-run economic growth in Nigeria, it has significant long-run implications.
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