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An Error Correction Model Analysis of the Effect of Total External Debt on the Nigerian Economy (1980–2015)

Author

Listed:
  • Nwaoha, William Chimee

    (Adjunct-Lecturer Dept. of Economics, Institute of Ecumenical Education, Enugu in Affiliation with Enugu State University of Science & Technology (ESUT), Nigeria)

  • Ejem, Chukwu Agwu

    (Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria)

  • Egwu, Charles Chukwudinma

    (Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria)

  • Ugoji-Eke, Patience Nnenna

    (Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria)

  • Nwabeke, Chidinma Elizabeth

    (Lecturer Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria)

Abstract

This study used error correction model (ECM) to analyse the effect of total external debt (TED) on the Nigerian economy proxied by gross domestic product (GDP) during the period 1980-2015. The data such as TED and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin. The result of the finding revealed that total external debt exerts negative and significant influence on GDP. This implies that, as total external debt increases, GDP also decreases and vice versa. Therefore, the researcher recommends that any external loan obtained by the government should be channelled to productive projects that yield high on returns on investment rather than allocating the fund to finance dead-weight debt, hence, engendering sustainable economic growth in the economy.

Suggested Citation

  • Nwaoha, William Chimee & Ejem, Chukwu Agwu & Egwu, Charles Chukwudinma & Ugoji-Eke, Patience Nnenna & Nwabeke, Chidinma Elizabeth, 2017. "An Error Correction Model Analysis of the Effect of Total External Debt on the Nigerian Economy (1980–2015)," International Journal of Economics and Financial Research, Academic Research Publishing Group, vol. 3(8), pages 119-129, 08-2017.
    • Handle: RePEc:arp:ijefrr:2017:p:119-129
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Keywords

    GDP; TED; ADF; ECM.;
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