DOMESTIC DEBT EFFECT ON NIGERIA'S ECONOMIC GROWTH

This study empirically investigates the effect of domestic debt and the growth of Nigeria’s economy for the period of 1980 to 2020. The study is based on the crowding-out hypothesis. To achieve its objectives treasury bills, treasury certificates, and treasury bonds were used as a proxy for domestic debt which constitutes the study’s independent variables. Also, gross domestic product (GDP) was used as a proxy for Nigeria’s economy which forms the study’s dependent variable. Secondary data sourced from the Central Bank of Nigeria (CBN) statistical bulletin was made use of. Multi-linear regression was adopted in the study. While the Ordinary Least Square (OLS) approach was used to carry out a short-run analysis, the Johansen cointegration test was used to carry out a long-run analysis. The statistical result shows that in the short-run domestic debt largely determines economic growth in Nigeria. Also, the obtained result reveals a long-run relationship between domestic debt and the growth of Nigeria’s economy. Recommendations were made for the purpose of ensuring that Nigeria’s economy benefits largely from its government’s acquisition of domestic debt.