An Empirical Analyses of the Effect of National Debt on Inflation Rate in Nigeria

Okafor, V. I.; Godspower, J. O.; Obizuo, C. J.

An Empirical Analyses of the Effect of National Debt on Inflation Rate in Nigeria

Authors: Okafor, Victor Ikechukwu, Godspower, Jennifer Odinakachi, Obizuo, Chinwendu Judith

Journal: International Journal of Advanced Finance and Accounting (IJAFA), ISSN 2765-8457

Citation: IJAFA 2(1): 16-29, 2021-03-31.

PDF: Download full-text PDF

Type: Original Research

Abstract

This study reviewed the relationship between national debt and inflation rate in Nigeria using multiple linear regression and simple linear regression. Augmented-Dickey fuller test and Breusch-Pagan test were conducted to ascertain if my model follows the assumptions of ordinal linear regression (OLS). It was found that external debt and domestic debt in a multilinear model does not have any significant effect and/or relationship with inflation rate, while in a simple regression model (using national debt as predictor) does have a negative correlation with inflation rate. This supports the primary purpose for government borrowing, financing deficit budget for the prolonged growth and sustainability of the economy.

Keywords

Inflation Rate in Nigeria, External Debt, Domestic Debt, OLS

Full Text

Published by AIR JOURNALS. Open Access under CC BY 4.0.