Autoregressive Distributed Lag Research Articles

Dynamic linkages between element input structure, global value chain, and carbon emissions: evidence from a heterogeneous panel cointegration model

ABSTRACT Industrial CO2 constitutes a dominant component of global CO2 emissions. Therefore, modifications in industrial production processes are crucial. We analyse global cross-national panel datasets from 1995 to 2018 using the panel autoregressive distributed lag (ARDL) model to provide comprehensive evidence of the combined effects of input-side element structures and production-side global value chain (GVC) divisions on output-side CO2 emissions. The results show that: (i) Renewable energy and service elements in production factors can reduce CO2 emissions, though their abatement effects vary. Both can produce sustained carbon mitigation effects in the long term, but only renewable energy is effective in the short term. (ii) The GVC division pattern can induce a CO2 emission increase in both the short and long term, though these effects are heterogeneous depending on the differences in forward-backward GVC divisions. (iii) A path dependence analysis shows that input-side element structures can change production-side GVC divisions, thereby affecting output-side emissions. This study extends our understanding of the environmental effects of various production links and helps coordinate high-quality economic development and impending environmental constraints.

Public Revenues and Educational Sector Productivity in Nigeria

This study examined the influence of public revenue on the productivity of the educational sector, focusing on how various tax policies and expenditures impact education’s contribution to the Gross Domestic Product (GDP), focusing on the role of Company Income Tax (CIT), Education Tax (EDT), Research and Development Investment (R&DI), and Capital Expenditure (CAPEX). Using annual data spanning from 1994 to 2023, the study employs econometric techniques, including the Autoregressive Distributed Lag (ARDL) model, to analyze the relationship between these variables and the education sector’s economic performance. The findings reveal that CIT and EDT positively influence the education sector’s contribution to GDP, suggesting that these forms of taxation play a crucial role in funding educational activities and stimulating economic growth within the sector. Additionally, R&DI and CAPEX exhibit mixed effects on the education sector, with lagged investments showing a more significant impact on economic performance over time. It was recommended that there is a need by policy makers and stake holders for continued efforts to create a conducive fiscal environment for businesses operating in the education sector, including favorable tax policies and incentives to stimulate investment and innovation. Keywords: Nigerian tax system, educational sector, Company Income Tax, Education Tax, Capital Expenditure.

Macroeconomic variables and initial public offerings in Sri Lanka: a principal component analysis approach

PurposeThis study aims to comprehensively examine the relationship between initial public offering (IPO) activities and macroeconomic factors in Sri Lanka.Design/methodology/approachThis study uses principal component analysis (PCA) and autoregressive distributed lag (ARDL) techniques to examine the relationship between IPO activities and macroeconomic factors. Ten macroeconomic variables are transformed into principal components (factors) using PCA. Then, ARDL is applied to investigate the long- and short-term relationships between IPO activities and the transformed macroeconomic factors.FindingsThe empirical investigation identifies three principal factors from the ten macroeconomic variables, of which two factors have a significant long-run association with IPO activities: “return on investment (RTOI)” and “economic and market development (ECMD).” In the short run, “trade openness and banking sector development (TOBD)” and RTOI are significantly associated with IPO activities.Research limitations/implicationsThe study was based on 30 years of observations, which passed all diagnostic tests but may be insufficient for generalizing the findings. Future studies could use high-frequency data (monthly or quarterly) to increase the number of observations and repeat the method and analysis. Also, while the symmetrical ARDL method was used in this study, an asymmetrical ARDL method may provide more insightful results and interpretations.Practical implicationsThe study highlights the importance of considering both long- and short-term associations when analyzing the impact of macroeconomic variables on IPO activities.Originality/valueThis study is the first to comprehensively examine the relationship between IPO activities and macroeconomic variables using PCA and the ARDL technique. The study provides insight into the macroeconomic factors that influence IPO activities in Sri Lanka and highlights the importance of considering long- and short-term associations.

The asymmetric and dynamic effects of oil price shocks and geopolitical risks on carbon prices in China

ABSTRACT This paper investigates the asymmetric and dynamic effects of oil price shocks and geopolitical risks (GPR) on carbon prices in China. We address this issue using a quantile framework, incorporating the quantile autoregressive distributed lag (QARDL) approach, rolling window QARDL and the quantile Granger causality test. Empirical findings indicate that in the long term, oil risk and supply shocks positively impact carbon prices in bullish markets, while oil demand shocks affect normal and bearish markets. GPR significantly drives carbon prices across all quantiles, except the 0.8 quantile, with the strongest effect observed in extremely bullish markets. In the short term, oil shocks and GPR have a similar but stronger influence. Additionally, both the short- and long-term effects of oil price shocks and GPR vary over time. The ‘camel-hump’ shape of the causality further validates the asymmetric causal effects of oil price shocks and GPR on carbon prices. These findings provide valuable insights for portfolio managers and policymakers, emphasizing the importance of adopting a quantile-based approach to risk management, rather than focusing solely on average effects.

Determinants of Inflation in Pakistan: A Comprehensive Analysis of Macroeconomic Variables (1991–2022)

This research paper investigates the determinants of inflation in Pakistan from 1991 to 2022, focusing on key macroeconomic variables such as imports, GDP growth rate, GDP per capita, military expenditure, population growth, total debt service, and unemployment. The main objective is to analyse the impact of these variables on inflation and provide policymakers with actionable insights. Utilizing annual time series data from reliable source World Bank WDI, the study employs descriptive statistics, correlation analysis, ADF unit root tests, regression analysis, and the Autoregressive Distributed Lag (ARDL) model. The findings reveal significant interdependencies among the examined variables. The correlation analysis shows strong positive relationships between inflation and imports and military expenditure, while GDP per capita and population growth negatively correlate with inflation. OLS results confirm that imports, GDP growth, and total debt service significantly raise inflation, whereas GDP per capita, military expenditure, and population reduce inflation. The ARDL model reveals that, in the long run, imports, GDP growth, and debt service positively affect inflation, while GDP per capita, population growth, and unemployment exert downward pressure. Short-run dynamics indicate that inflation quickly adjusts to economic shocks, with imports and GDP growth having an immediate impact. These findings highlight the importance of managing imports and debt, while promoting economic growth to maintain price stability. The policy implications emphasize the need for targeted monetary policies to manage imports and optimize debt service strategies, as well as policies aimed at enhancing economic growth and increasing per capita income. Effective debt management and strategic military spending are also vital for maintaining price stability. Despite its comprehensive analysis, the study identifies gaps such as the need for further exploration of structural breaks and non-linear effects in inflation dynamics, and the impact of external factors like global oil prices. The significance of this research lies in its contribution to understanding the complex economic interactions influencing inflation in Pakistan, providing a crucial resource for policymakers to develop effective strategies for economic stability in developing economies.

Analysis of Ghana—Nigeria Export Trade: Linkages, Impacts and Policy Implications

This study hypothesised that the Ghana-Nigeria export trade has a significant impact on the economy of Ghana. Time series on variables of interest were obtained from the World Development Indicator (WDI) of the World Bank and the Ghana Statistical Service (GSS). The 2018 input-output table for Ghana was obtained from the social accounting matrix of the Organisation for Economic Co-operation and Development (OECD). The data were analysed using descriptive statistics, input-output analysis, and the autoregressive distributed lag (ARDL) bound testing approach. Through input-output analysis, this study found significant total impacts (151.585 to 190.139 million Ghana Cedis) in 2017 and 2018, centred around export commodities such as food and live animals, beverages, and tobacco. The expanding field of influence (214.373 to 268.898) and the ratio of impacts to Ghana's GDP (0.058% to 0.062%, then 0.044%) substantiate their pronounced role in the economy. The ARDL model showed that a percent increase in Ghana-Nigeria exports led to a 0.1017% increase in Ghana’s real GDP on the log-run. The speed of adjustment was 42.18% in each period. By providing support to exporters, both countries can leverage their comparative advantages, strengthen economic ties, and foster sustained growth through increased export trade.

Macroeconomic Conditions and Private Equity in Morocco: A Bounds-Testing Cointegration Approach

Private equity plays a pivotal role in fostering entrepreneurship, innovation, and job creation across many economies. In Morocco, the private equity sector is in its developmental stage and faces significant macroeconomic challenges that hinder its growth. This study seeks to address the gap in the literature by examining how key macroeconomic factors—including GDP growth, exchange rates, government spending, inflation, gross domestic savings, interest rates, and industrial production—affect private equity fundraising in Morocco between 1990 and 2019. Employing the autoregressive distributed lag (ARDL) model, we investigate both short- and long-term relationships between these macroeconomic variables and private equity fundraising. The results reveal that GDP growth and interest rates significantly influence private equity fundraising in both the short and long run, while inflation and government spending have a more pronounced long-term effect. These findings highlight the need for policies focused on stabilizing macroeconomic conditions to attract private equity investments. Policymakers should prioritize fostering a stable economic environment characterized by sustainable growth, low inflation, and moderate interest rates to create a favorable investment climate.

A VAR Framework of Exchange Rates, Interest Rates, and Inflation Through COVID-19 in Turkey: Empirical Evidence From Linear Cointegration and Causality Analysis

In this study, we investigate the impact of exchange rates and interest rates on inflation in Turkey using monthly data from January 2004 to July 2020 obtained from the Turkish Statistical Institute. Our vector autoregressive (VAR) model showed an evidence of stochastic behaviour among the series. The autoregressive distributed lag (ARDL) results showed a short-run and long-run covariate between exchange rates, interest rates and inflation. Specifically, the findings showed a short-run and long-run relationship between inflation, producer price index (PPI), and Turkish interbank offer rates (TIBOR). However, there was no connection between inflation and dollar exchange rates (DSR) and commercial banks’ interest rates (CBIR). The VAR Granger causality results revealed the variables to be exogenous except DSR, which displayed endogenous to other variables. Nevertheless, the results revealed unidirectional causality from the producer price index (PPI) to DSR and unidirectional causation from TIBOR to CBIR. It means an increase in production costs through raw materials importation led to devaluation of the Turkish lira. Similarly, TIBOR rates drive CBIR high, making domestic lending more expensive, which will inhibit loan provisions to the private sectors, which will result in an economic contraction and eventually high inflation. Our unit roots breakpoint results pointed to breaks in the dataset were between 2016-2019, reflecting the effects of the Fetullah Terrorist Organization (FETO) failed coup, the 2018 U.S. embargo, and an assumed fiscal dominance as the major and direct causes of economic instability and inflation. However, Covid-19 may have acted as a contributing factor since then. Thus, we recommend that the monetary authorities articulate policy to avoid the assumed fiscal dominance.

Foreign Finance, FDI-Climate Interaction and Economic Development in Ethiopia: A Time Series Analysis

Developing countries such as Ethiopia, over the years particularly after the cold war, starting from early 1990s have adopted neoliberal policies through reforms to attract foreign finance for development needs in view of inadequacy of domestic capital for public and private investment. However, despite the inflow of foreign capital into the economy, it is still grappling with major development challenges. It is in view of this that this study examines the impact of foreign finance on the economy, and whether FDI-climate interaction limits the potential impact of foreign direct investment (FDI) as an important component of foreign capital, on economic development in Ethiopia. The study further reveals the implications of post-cold war adoption of market-oriented policies in Ethiopia. The study uses autoregressive distributed lag (ARDL) model with data spanning from 1981 to 2020. It is found that FDI has positive and significant impact on economic development in the long run, but the positive effect is revealed to be insignificant in the short run. On the other hand, foreign debt is revealed to have long term negative though insignificant impact on economic development of the country. Furthermore, it is revealed that FDI-climate interaction has negative implication on the economy in both the long run and short run. Therefore, the effectiveness and efficiency of foreign finance on growth and development outcome in Ethiopia is conditional on whether it produces long run sustainable environmental outcome. Also, the adoption of neoliberal policies has not resulted in development of Ethiopia. Hence, the study recommends among others, the need for consideration of absorptive capacity of the country as a recipient economy and in its reforms, as well as the need for the government and development partners to ensure assessment of the long run potential environmental impact of foreign capital before they are deployed on the economy.

Exchange Rate Dynamics and Monetary Fundamentals: Evidence from South Asian Countries

This paper examined the role of monetary fundamentals in determining nominal exchange rate changes in South Asian countries. The Vector Autoregressive (VAR) technique and Autoregressive Distribution Lag (ARDL) were used. Results from the VAR indicate that the exchange rate responds to shock originating from differences in money supply, inflation differential, interest rate, and real income differential and are consistent with the short-run predictions of the monetary model of the exchange rate. The results show that inflation and interest rate differentials are responsible for the majority of changes in exchange rates in the short run. The conclusion from the result is that, particularly in the short run, monetary fundamentals are the primary causes of exchange rate fluctuations in South Asian countries.

Macroeconomic Uncertainty and Sectoral Output in Nigeria

The paper examined the impact of macroeconomic uncertainty on the ten largest subsectors of the Nigerian economy using quarterly data from Q1 1981 to Q4 2023. The rationale behind selecting the subsectors is that these sectors constitute about 89 percent of the entire productive activities in the economy. To achieve the objectives, the paper created an index for macroeconomic uncertainty using exchange rate uncertainty, interest rate uncertainty, inflation uncertainty, and real gross domestic product (GDP) uncertainty to create this index. Furthermore, the paper explored the impacts of macroeconomic uncertainty and these individual economic uncertainty indexes on sector output. The study employed the novel dynamic autoregressive distributed lag (novel dynamic ARDL) technique to estimate the results and used the canonical cointegrating regression (CCR) and fully modified ordinary least square (FMOLS) techniques as robustness on the main findings. The findings demonstrated that during periods of recession, macroeconomic uncertainty tends to heighten or reach its peak in Nigeria. Furthermore, the paper showed that the sectors react homogenously to macroeconomic uncertainty. In addition, the impulse response results from the novel dynamic ARDL estimation show that macroeconomic uncertainty can predict robust negative movements in sector output for Nigeria. Indeed, these findings are insightful as they show the importance of macroeconomic uncertainties as key drivers of sector output in Nigeria. The paper argues that the policy authorities should improve their efforts to reduce macroeconomic uncertainty and foster a stable real sector/sectoral output to enhance the macroeconomic environment for Nigeria to aim for higher levels of growth.

The determinants of volatility connectedness of South African equity super sectors

The paper aims to explore the determinants of total volatility connectedness of nine super sectors on the Johannesburg Stock Exchange (JSE) market from 3rd January 2006 to 31st December 2021. These sectors are Automobile and Parts, Chemical, Telecommunication, Technology, Energy, Health, Finance, Insurance, and General Industrials. The paper applied Diebold and Yilmaz connectedness matrix and the time-varying parameter – vector autoregressive (TVP-VAR) model to determine the sectorial total volatility connectedness index (STVCI). After that, the nonlinear autoregressive distributed lag model (NARDL) was used to determine the asymmetric effects and the drivers of STVCI. It was found that the partial sum decomposition of the South African volatility index (SAVI) and Economic Policy Uncertainty Index (EPU) are the key determinants of the STVCI both in the long and short run. However, domestic market return (DMR) shows no significant asymmetric effect on STVCI. The study concluded that SAVI and EPU are the key determinants of volatility connectedness among the JSE super-sectors. The results unveil important implications for sectorial investors and policymakers on potential regulations and stability of the significant determinants of spillover risk.

Inference of Some Macroeconomic Variables on Nigeria Unemployment Rate

This research investigates the impact of foreign direct investment (FDI), government expenditure (GOE), and inflation rate (IFR) on the unemployment rate (UPR) in Nigeria from 1985 to 2021 through Autoregressive Distributed Lag (ARDL) modeling approach. An initial assessment to test the significance of signals between each independent variable and UPR was performed using rolling correlation analysis. Subsequently, the bounds test methodology to examine cointegration among between the FDI, GOE, IFR, and UPR was performed. Additionally, the causal relationship between these economic variables was performed through the Error Correction Model (ECM) approach. The estimated ARDL model parameters stability was determined using the cumulative sum (CUSUM) of squares chart. The Augmented Dickey Fuller unit root test suggests that the variables are stationary at first differences (I(1)). The bounds test revealed that the variables are cointegrated at 1%, 5%, and 10% indicating a long run relationship between UPR and FDI, GOE, and IFR. The ARDL results indicates that at 5%, a unit increase in FDI at lag one have a long run significant decreasing impact on UPR by 19.96%. But in the short run, the FDI at lag one has a significant increasing effect on UPR by 7.23%. However, the CUSUM of square chart shows unstable parameter estimation based on the Akaike Information Criteria selected model, ARDL (1, 3, 0, 0). The study concludes that UPR is being influenced by FDI in reducing UPR in the long run. Recommendation based on the findings is that FDI should be considered most important when policies are drafted for tackling the issue bordering UPR in Nigeria.

Estimating the impacts of economic globalization and natural resources on ecological footprints within the N-shaped EKC in the Next 11 economies

The economic development of N-11 countries has been significantly influenced by the contributions of natural resources (NAT) and economic globalization (EG). These countries have been facing drastic environmental problems for several years. Hence, it is imperative to ascertain the environmental ramifications of natural resource extraction activities in the N-11 nations. In doing so, this study examines the impact of gross domestic product (GDP), EG, and NAT on ecological footprints (EF) within the time frame of 1971 to 2022 in the group of N-11 countries. After verifying the cross-sectional dependence, this work found the integration of all variables at first difference. To provide short and long run econometric results; this study utilizes cross sectional autoregressive distributed lag (CS-ARDL). The findings indicate that the presence of NAT rent has a detrimental impact (0.03%) on the ecological quality within the N-11 nations. Moreover, it can be argued that both EG and GDP exhibit environmentally sustainable characteristics over an extended period by (0.03% and − 3.12%) respectively. This study does not provide evidence for the presence of an N-shaped Environmental Kuznets Curve (EKC) in the N-11 nations. Based on the findings, a policy recommendation is proposed for the nations in question. These countries must immediately implement and enforce robust environmental laws while fostering a heightened sense of environmental consciousness. It is imperative for emerging economies to increase their investments to explore and adopt efficient technologies in various economic sectors, including mining.

Balancing Economic and Construction Growth with Environmental Sustainability in Albania’s Real Estate Sector

This study aims to examine the relationship between real estate development and environmental impact in Albania during the period of 1995–2022. This is among the first scientific studies of this nature in Albania and the region. Using an Autoregressive Distribution Lag (ARDL) model and EViews 12 software, we analyze how carbon emissions relate to economic indicators such as the issuance of building permits, Gross Domestic Product (GDP), and energy consumption patterns. Our results show a positive relationship between construction activities and increased carbon emissions, signaling a development model that currently diverges from sustainable practices. This research is important as it not only fills a critical gap by quantifying the environmental footprint of the real estate sector in Albania but also provides strong signals to support policy makers in guiding sustainable development initiatives. This study recommends that future strategies integrate and harmonize economic growth with environmental care by targeting sustainability in construction techniques and renewable energy.

Investigation of Inflation and Wage Dynamics in Nigeria: New Empirical Insights

The current inflationary pressure in Nigeria is eroding the purchasing power of the salaried workers and the value of the national currency with the proposition that it could worsen the welfare of the citizens despite the abject and extreme poverty that prevails in the country. The paper therefore made an empirical investigation into the inflation and wage dynamics in Nigeria. The variables were tested for unit roots using ADF tests. The unit roots shows that all the variables are non-stationary at levels except the Consumer Price Index of Transportation (CT) and Wages and Salaried Workers as Proportion of Total Employment (WSW). Employee compensation including remittances (COMP), inflation rate (INFR), WSW and Consumer Price Index of Transportation (CT) are stationary at first difference. Autoregressive Distributed Lag (ARDL) model was used in the methodology. The ARDL long-run result shows that the Consumer Price Index for Food (CF) has the highest impact on the Compensation of Employees (COMP). For every 1 percent change in COMP, CF changes by 19 percent. As INF rises, COMP falls. This is shown by the negative coefficient of INFR. The long-run result also suggests that for every 1 percent change in COMP, CT increases by 9%.The short-run dynamic model showed that a 6% fall in the lag period of inflation level led to a 1% increase in employee compensation and a one-year previous period fall of 30% in WSW, bringing about I% increase in employee compensation. The long-run model showed that the variables are co-integrated which indicates that variation in the short run will be corrected in the long run with 59% speed of adjustment. The study shows that the main drivers of inflation in Nigeria are Consumer Price Index for Food (CF) and Consumer Price Index for Transportation (CT) which directly have negative impact on Employee Compensation (COMP). In line with the above findings, It was recommended that maximum price legislature, demonetisation of currency, exercising great caution in incurring public debt, drastic reduction in government expenditure and adoption of rational wage policy can be a viable macroeconomic policy option.

An analysis of the effects of aging society on global stock markets

PurposeThe primary purpose of this study is to explore the effects of demographic transition toward aging populations on the performance of stock market indices across various economic developments. The research aims to provide valuable insights into the life-cycle hypothesis on savings patterns, investment behavior and the potential reverberations on global financial markets.Design/methodology/approachThe study adopts a comprehensive global perspective, scrutinizing the effects of aging populations on stock market indices across developed, developing and transitional economies through the panel data analysis. Using annual data spanning the period from 1991 to 2020, encompassing a sample of 10 countries from each economic development level, the study employs the panel autoregressive distributed lag (ARDL) model with fixed effect estimation.FindingsThe findings unveil a statistically significant positive impact of the elderly population proportion on global stock market indices. However, the magnitude and contours of this impact exhibit considerable heterogeneity across different country groups. Specifically, the study finds that while the aging population significantly influences stock market performance in developed nations, its effect is overshadowed by other economic factors, such as consumer price indices and interest rates, in developing countries and economies in transition.Originality/valueThe originality and value of this study lie in its comprehensive global perspective, which encompasses a diverse array of economies at varying developmental stages. The research contributes to an understanding of the effects of demographic transitions on stock market performance on a global scale. The insights derived from this study hold significant implications for policymakers, financial institutions and investors seeking to navigate the challenges and opportunities posed by aging societies in an increasingly interconnected global economy. Additionally, the findings highlight the need for specific strategies and policies that account for the unique economic characteristics and developmental stages of different nations.

DMBs Credit Disbursements and Real Sector Financial Performance in Nigeria

he study examines the impact of DMBs credit disbursements and real sector financial performance in Nigeria over the period from 1994 to 2023. The credit sources considered were; commercial banks, though study extended its insights into merchant banks, microfinance banks, and development banks and how they influenced classified sectors like; the agricultural, industrial, and service sectors. The study employed secondary data gotten from the CBN statistical Bulletin. The study employed an Autoregressive Distributed Lag (ARDL) estimation. The findings reveal that the R-squared values vary significantly across models, indicating differing levels of predictive accuracy. The agricultural sector shows the highest R-squared value of 0.9981, suggesting that credit from these institutions has a substantial impact on this sector’s contribution to GDP. Conversely, the industrial sector exhibits the lowest R-squared value of 0.9907, indicating a lesser degree of predictability and impact from credit types. The service sector demonstrates an intermediate R-squared value of 0.9910, reflecting a moderate level of influence from financial credit. The findings indicate varied effects of different types of credit on sectoral contributions. Commercial banks’ credits did not significantly influence the agricultural sector but showed a significant positive impact on the service sector. In contrast, merchant banks’ credits had a significant effect on both the agricultural and service sectors, while their impact on the industrial sector was not significant. Microfinance banks’ credits demonstrated a marginally significant impact on the agricultural sector but had no significant influence on the industrial and service sectors. Development banks’ credits did not significantly affect the agricultural or industrial sectors but had a significant positive impact on the service sector. Based on these findings, the study recommends that commercial banks focus on increasing credit support to the service sector to sustain its contribution to GDP. Merchant banks should enhance their credit support to the agricultural sector to leverage its potential for economic growth. Microfinance banks are encouraged to refine their lending strategies to better impact the agricultural sector, possibly through targeted programs that address specific needs of small-scale farmers. Development banks are advised to continue their support to the service sector, ensuring that credit interventions are aligned with sectoral growth objectives. Keywords: DMBS, Commercial Bank Credits; Real sector; Nigeria.

Total Debt Service and Economic Growth in Nigeria: The Empirical Nexus

This study examines the relationship between debt service and economic growth in Nigeria in the period 1990-2022, utilizing time series data from the World Development Indicator and CBN Statistical Bulletin. The issue of debt servicing has become difficult for developing countries like Nigeria, and has not only stifle economic growth, but also increased the rate of poverty and unemployment in these countries. The study explores the empirical nexus between total debt service and economic growth in Nigeria, employing GDP growth rate as the dependent variable, while the explanatory variables involved; are total debt serving, inflation rate and capital expenditure. The variables were estimated with autoregressive distributed lag (ARDL) method, among other, after the stationarity tests conducted on them Indicate that the variables were of mixed integration. Evidence suggesting a long-term equilibrium relationship among the variables was also established given the cointegration result. The ARDL results reveal that the inflation rate has an inverse and significant impact on GDP growth. Total Debt services variable also exhibited a similar impact on GDP growth. However, the results indicated that capital expenditure variable has a direct and significant impact on GDP growth. Based on the findings, this study recommends that the Nigerian government should implement robust monetary policies aimed at controlling inflation and revisit its debt management strategy to ensure sustainability. It is also recommended that the government should not only increase capital expenditure but also ensure that these investments are directed towards sectors with the highest economic growth potentials. Keywords: Debt service, economic growth, inflation, capital expenditure and GDP growth

Total Debt Service and Economic Growth in Nigeria: The Empirical Nexus

This study examines the relationship between debt service and economic growth in Nigeria in the period 1990-2022, utilizing time series data from the World Development Indicator and CBN Statistical Bulletin. The issue of debt servicing has become difficult for developing countries like Nigeria, and has not only stifle economic growth, but also increased the rate of poverty and unemployment in these countries. The study explores the empirical nexus between total debt service and economic growth in Nigeria, employing GDP growth rate as the dependent variable, while the explanatory variables involved; are total debt serving, inflation rate and capital expenditure. The variables were estimated with autoregressive distributed lag (ARDL) method, among other, after the stationarity tests conducted on them Indicate that the variables were of mixed integration. Evidence suggesting a long-term equilibrium relationship among the variables was also established given the cointegration result. The ARDL results reveal that the inflation rate has an inverse and significant impact on GDP growth. Total Debt services variable also exhibited a similar impact on GDP growth. However, the results indicated that capital expenditure variable has a direct and significant impact on GDP growth. Based on the findings, this study recommends that the Nigerian government should implement robust monetary policies aimed at controlling inflation and revisit its debt management strategy to ensure sustainability. It is also recommended that the government should not only increase capital expenditure but also ensure that these investments are directed towards sectors with the highest economic growth potentials. Keywords: Debt service, economic growth, inflation, capital expenditure and GDP growth