ECONOMETRIC ANALYSIS OF EXTERNAL DEBT, EXCHANGE RATE AND ECONOMIC GROWTH IN NIGERIA
Keywords:
External debt, Exchange rate, Economic growth, Gross domestic product, Debt Management Office, Debt portfolio, External borrowingsAbstract
This study examined the effect of external debt and exchange rate on economic growth in Nigeria. The study employed Unit Root test, Descriptive statistics, Johansen-Juselius Cointegration test and Vector Error Correction model using E-Views computer software to analyse time series secondary data collected for the period 1981 to 2012. The findings revealed that external debt contributes positively to economic growth in Nigeria in the short run but had a statistically negative significant influence on economic growth in the long run. On the other hand, exchange rate had a positive influence on economic growth in Nigeria in the long run but had a statistically negative significant influence on economic growth in the short run. The results of the study as they stand, has important policy implications for the economic growth of Nigeria. The study therefore recommends that policy makers and the regulatory authorities adopt appropriate exchange rate regime for the country to achieve meaningful economic development. It is also recommended that the relevant authorities should be proactive in the management of the country’s external debt portfolio and all external borrowings should be judiciously utilized to accelerate the desired economic growth in Nigeria.
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