Domestic debt, public spending and economic growth in Nigeria: a mediation analysis

Nnachi Egwu Onuoha
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Abstract

Purpose

This study is aimed at interrogating the mediation role of public spending in domestic debt and economic growth nexus, drawing on debt overhang theory and the Keynesian view.

Design/methodology/approach

The study deployed a time series data (from 1981 to 2020) set drawn from the 2021 Central Bank of Nigeria (CBN) statistical bulletin. The mediation effect of public spending was tested by performing structural equation modeling after pre-estimation Augmented Dickey-Fuller unit root test.

Findings

Overall, the study outcomes indicate that domestic debt and public spending have significant positive effects on economic growth. Additionally, the study finds public spending to partially mediate domestic debt and economic growth nexus.

Practical implications

This study's outcomes provide insights that will enable fiscal policymakers to focus on internal borrowing, keep it under strict control to avert crowding out effects and improve public spending on productive projects to stimulate economic growth.

Originality/value

As the first study to question the mediation effect of public spending in domestic debt-economic growth relationship, it deepens and extends extant literature on domestic debt-economic growth nexus.

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尼日利亚的内债、公共开支和经济增长:中介分析
本研究旨在借鉴债务悬置理论和凯恩斯主义观点,探讨公共支出在国内债务和经济增长关系中的中介作用。研究采用的时间序列数据(1981 年至 2020 年)来自尼日利亚中央银行(CBN)2021 年的统计公报。研究结果总体上表明,国内债务和公共支出对经济增长有显著的积极影响。此外,研究还发现公共支出对国内债务与经济增长之间的关系起到了部分中介作用。本研究的结果提供了一些见解,有助于财政政策制定者关注内部借贷,严格控制内部借贷以避免挤出效应,并改善生产性项目的公共支出以刺激经济增长。
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来源期刊
CiteScore
3.20
自引率
7.70%
发文量
41
期刊介绍: African Journal of Economic and Management Studies (AJEMS) advances both theoretical and empirical research, informs policies and practices, and improves understanding of how economic and business decisions shape the lives of Africans. AJEMS is a multidisciplinary journal and welcomes papers from all the major disciplines in economics, business and management studies.
期刊最新文献
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