Impact of Public Debt on Poverty in Nigeria: A Vector Autoregressive Analysis

Abstract

This study examined the impact of public debt on poverty in Nigeria for the period 1985 to 2021. The study regressed poverty against public debt in a vector error correction model using the Johansen approach. The study found a long-run relationship between public debt and poverty in Nigeria. The effect of public debt on poverty in Nigeria was found to be positive and permanent, becoming more pronounced with time. The study recommends the government’s deliberate effort in restraining continuous unsustainable public borrowing while also determining the maximum threshold at which debt servicing becomes poverty-reinforcing.