An Empirical Analysis of the Impact of Public Debt on Economic Growth: Evidence from Nigeria 1975-2005

Obademi Olalekan Emmanuel


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:


Alison, J. (2001). Key Issues for Analyzing Domestic Debt Sustainability. Debt Relief International [Publication 5].

Borensztein, E. (1989). Debt Overhang. Credit Rationing and Investment, IMF Working Paper WP/89/74 Washington D.C

Egwaikhide, F.O. (1997). Effects of Budget Deficits on the Current Account Balance in Nigeria. A Simulation Exercise. AERC Research Paper 70, African Economic Research Consortium, Nairobi.

Essien, E., & Onwioduokit, E. (1998). Nigeria’s Economic Growth and Foreign Debt, An Analytical Examination. CBN Economic and Financial Review, 3(1).

Front, K., & Krugman, P. (1990). Market-Based Debt Reduction for Developing Countries; Principles and Prospects. Massachusetts National Bureau for Economic Research.

Iyoha, M.A., & Iyare, S. (1994). Africa’s Debt Problems in African Debt Burden and Economic Development (pp. 1-13). Nigeria Economic Society Publication..

Mjema, G.D. (1996). The Impact of Debt and Debt Servicing in the Economy of Tanzania, A Simultaneous Equation Approach. Journal of Economic Policy Ibadan, 2(1).

Ola, C.S., & Adeyemo, J. (1998). Public Finance in Nigeria. Lagos: CSS Publishing Company.

Yekini, T.K. (2002). External Debt Burden and Macroeconomic Performance in Nigeria. NISER Monograph Series, 12.



  • There are currently no refbacks.

Copyright (c)

Share us to:   


  • How to do online submission to another Journal?
  • If you have already registered in Journal A, then how can you submit another article to Journal B? It takes two steps to make it happen:

1. Register yourself in Journal B as an Author

  • Find the journal you want to submit to in CATEGORIES, click on “VIEW JOURNAL”, “Online Submissions”, “GO TO LOGIN” and “Edit My Profile”. Check “Author” on the “Edit Profile” page, then “Save”.

2. Submission

  • Go to “User Home”, and click on “Author” under the name of Journal B. You may start a New Submission by clicking on “CLICK HERE”.
  • We only use three mailboxes as follows to deal with issues about paper acceptance, payment and submission of electronic versions of our journals to databases:;;

 Articles published in Canadian Social Science are licensed under Creative Commons Attribution 4.0 (CC-BY).


Address1020 Bouvier Street, Suite 400, Quebec City, Quebec, G2K 0K9, Canada.

Website: Http:// Http://,

Copyright © Canadian Academy of Oriental and Occidental Culture