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2011 (Vol. 3, Issue: 4)
Article Information:

External Debt, Internal Debt and Economic Growth Bound in Nigeria using a Causality Approach

D. Amassoma
Corresponding Author:  Amassoma J. Ditimi 

Key words:  Causality, economic growth, external debt, internal debt, VAR, VEC,
Vol. 3 , (4): 320-325
Submitted Accepted Published
2011 April, 12 2011 June, 15 2011 July, 30

The study examined the causal nexus between external debt, domestic debt and economic growth in Nigeria between 1970 and 2009 using a Vector Autoregressive (VAR) and a Vector Error Correction (VEC) models. The variables used in the study were tested for stationarity using the Augmented Dickey Fuller and Philip Perron test. The result showed that the variables are stationary at first differencing. Co-integration test was also performed and the result revealed the absence of co-integration between domestic debt and economic growth while the result also revealed the presence of co-integration between external debt and economic growth. The co-integration results determined the appropriateness of methodological test for causality. The findings of the VAR model revealed that there is a bi-directional causality between domestic debt and economic growth while that of the VEC model revealed a unidirectional causality from economic growth to external debt in Nigeria. The study recommends that government should rely more on domestic debt in stimulating growth than on external debt.
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  Cite this Reference:
D. Amassoma, 2011. External Debt, Internal Debt and Economic Growth Bound in Nigeria using a Causality Approach.  Current Research Journal of Social Sciences, 3(4): 320-325.
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ISSN (Online):  2041-3246
ISSN (Print):   2041-3238
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