Economic and Financial Review


Central Bank of Nigeria


Crowding-out, Debt service, Public debt, Investment, Nigeria.


This study examines the effect of public debt on private investment in Nigeria. The linear and non-linear ARDL models are employed to analyse the series spanning the period 1981 to 2018. The estimation results show that an increase in total debt, external debt, and debt service payment adversely affects private investment, with the effects being symmetric. On the other hand, the effect of domestic debt on private investment is found to be asymmetric. Although a negative shock in domestic debt greatly improves private investment, a positive shock leads to a meagre positive effect on private investment. This finding indicates that although domestic debt reduction is more beneficial to private investment, domestic public debt accumulation does not negatively affect private investment in Nigeria. The study recommends curtailing excessive public borrowing and reducing the stock of public debt to improve private investment in Nigeria.

Author Bio

The authors are staff of the Ahmadu Bello University and Federal University Gusau

Publication Title

CBN Economic and Financial Review





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Recommended Citation

Abubakar, A. B., & Mamman, S. O., (2021). Effect of public debt on private investment in Nigeria: Evidence from an asymmetric dynamic model. Economic and Financial Review, 59(3), 59-86.



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