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), 2021-03-31.
DOI: 10.70878/ijafa.2021.0ac507db
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 Authorship 1 Okafor, Victor Ikechukwu (PhD), 2 Godspower, Jennifer Odinakachi, 3 Obizuo, Chinwendu Judith
Full Text
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.