MACROECONOMIC DETERMINANTS OF FOREIGN DEBT IN NIGERIA: EVIDENCE OF GRANGER CAUSALITY
Abstract
The research was informed by the necessity to analyze the macroeconomic factors of foreign debt in Nigeria through the Granger Causality Approach. The macroeconomic determinants that have been used are gross domestic product, consumer price index, domestic credit, productivity index, population, foreign reserve and balance of payment account. Secondary data was used to cover the years 1981-2023 after which the data of the central bank of Nigeria statistical bulletin data was used, and the descriptive statistics was applied to understand the behavior of the data set used. The outcome of the Granger causality test showed that has no causality between foreign debt and the macroeconomic variables under study with one-way causality being foreign debt to consumer price index and gross domestic product. The study ends by concluding that foreign debt facilitates gross domestic product and consumer price index recommends that conscious effort be consciously made by the government in ensuring that borrowed fund are invested in economic activities that has the capacity to spur development of the economy because foreign debt have the potential of promoting gross domestic product.
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