Nonlinear public debt and resource rent nexus in highly indebted resource-rich sub-Saharan economies: Evidence from Nigeria

Abstract

This paper contributes to empirical insights on nonlinear public debt and resource rent nexus in the Nigerian economy which profoundly typifies highly indebted resource-rich sub-Saharan nations. Predicated on the Ricardian equivalence theorem, results of nonlinear ARDL indicate (i) significant short-run and long-run asymmetric nexuses, (ii) negative shocks of resource rent impact more on public debt than positive shocks, and (iii) the pre-shock equilibria are never attained subsequently. These results are consistent with the robust Wald tests of asymmetries, and asymmetric dynamic multipliers estimates in explaining the persistently endemic public debt accumulation in resource-rich HISSA economies. Policy implications and options are discussed.