Effect of Public Debt on Recurrent Expenditure in Nigeria
- Author Zaccheaus, JACOB
- Co-Author Boniface Audu, AJAH
- DOI 10.17605/O
- Country : Nigeria
- Subject : Banking & Finance
Keywords : Domestic debt, External debt, Recurrent expenditure
Abstract
This study investigates the effect of public debt on recurrent expenditure in Nigeria for the period 2010Q1 to 2021Q1. Quarterly time series data for domestic debt, external debt and recurrent expenditure were collected from Central Bank of Nigeria statistical bulletin. Philip Perron test was used to test the stationarity of the data and the ARDL Bound cointegration test was utilized to determine presence of long run relationship. Vector Error Correction Model (VECM) was used for analysis since cointegration was established in the series. Wald test method was used to test the effect of domestic debt and external debt on recurrent expenditure in Nigeria. The findings showed that domestic debt has insignificant relationship with recurrent expenditure in Nigeria, while external debt has significant effect on recurrent expenditure in Nigeria. It was recommended that government should only obtain public loans whose interest rates are very low in order to reverse the effect of domestic public borrowing in its economy especially in the long run.
Comments
No have any comment !