PUBLIC DEBTS AND INFLATION IN NIGERIA: AN EMPIRICAL INVESTIGATION

The study was conducted with a view to examining the effect of public debts on inflation in Nigeria. The study period spanned 2000-2021. An ex-post facto research design with the use of time series data was employed for the study. Public debt was disaggregated into domestic debts and external debts while inflation was the rate of inflation as reported by the CBN statistical bulletin. Ordinary least square (OLS) estimation technique in linear form was used in estimating the study model. Findings showed that there is a negative non-significant relationship between domestic debts and inflation and a positive significant relationship between external debts and inflation in Nigeria for the studied period. The conclusion is that, domestic debt can be a very important tool in controlling inflation in Nigeria while external debts could be used in promoting investment in critical infrastructure and development. From the findings, it is recommended that government should consider the use of domestic debts as a tool for controlling inflation while external debts should only be considered when infrastructural development is necessary. In addition, there should be proper institutional framework to ensure effective management of public debts.