PUBLIC INVESTMENT, PUBLIC DEBTAND ECONOMIC GROWTH IN NIGERIA

Resumo

The study examines the effects of public debt public investment and economic growth of Nigeria. Using granger causality test, it was found that there is a uni-directional causality between public investment and public debt, running from public debt to public investment. An Autoregressive Distributed Lag Bound test of cointegration shows that there is a long run relationship between public debt and public investment, and that public debt negatively influences public investment. As for the effect of public debt on economic growth, a Threshold Autoregressive model shows 16.41% threshold level. Below the threshold, public debt has a positive effect on the economic growth. Above the threshold, public debt has negative effect on the economic growth. It is therefore concluded that public debt is a significant factor that determines the performance of public investment and economic growth of Nigeria.  It is recommended that government put in place necessary policies that enhance its revenue to reduce excessive borrowings that can hinder the economic performances. It is further advised that public debt be utilized basically for capital investment projects that have direct bearing to the lives of the ordinary citizens in terms for job creation and social welfare. Government should inculcate discipline in terms of servicing of debts to avoid recapitalization of arrears which add further pressure to the existing debt burden of the country.