scholarly journals Impact of National Debt Burden on Economic Stability in Nigeria

2021 ◽  
Vol 35 (1) ◽  
pp. 91-106
Author(s):  
Kingsley Onyekachi Onyele ◽  
Emmanuel Chijioke Nwadike
Keyword(s):  
Exchange Rate ◽  
External Debt ◽  
Government Revenue ◽  
National Debt ◽  
Economic Stability ◽  
Short Term ◽  
Debt Overhang ◽  
Debt Burden ◽  
Long Run ◽  
The Impact

Abstract The study argues that national debt becomes a burden when debt overhang is rising, a foreign reserve is inadequate to cover short-term external debt and government revenue is inadequate for debt servicing. This paper investigates the impact of national debt burden on economic stability in Nigeria. Data spanning from 1981 to 2019 have been collated from the World Development Indicators and Central Bank of Nigeria Statistical Bulletin, 2019 edition. Consequently, the variables used to measure debt burden are total debt-to-GDP ratio (debt overhang), short-term external debt-to-reserves ratio (reserve adequacy) and debt service cost-to-government revenue ratio (revenue adequacy) with exchange rate as a control variable, while economic stability is measured with real GDP growth rate. The Autoregressive Distributed Lag (ARDL) model is used for the analysis since the variables are stationary at both levels and first difference. The ARDL estimation shows that the explanatory variables collectively cause a diminishing impact on economic stability in the long run with revenue adequacy having a negative and significant impact. In the short run, all the components of debt burden, except debt overhang, have a negative and significant impact on economic stability. Under this circumstance, exchange rate has a positive and significant impact on economic stability in the long run.

scholarly journals The Debt Overhang Hypothesis: Evidence from Pakistan

2016 ◽  
Vol 11 (1) ◽  
pp. 140-151 ◽  
Author(s):  
Muhammad Imran Shah ◽  
Irfan Ullah ◽  
Zia Ur Rahman ◽  
Nadeem Jan
Keyword(s):  
Economic Growth ◽  
Dynamic Behaviour ◽  
Negative Impact ◽  
Labour Force ◽  
External Debt ◽  
Unit Roots ◽  
Debt Overhang ◽  
Debt Burden ◽  
Long Run ◽  
Domestic Labour

AbstractThis study investigates the debt overhang hypothesis for Pakistan in the period 1960-2007. The study examines empirically the dynamic behaviour of GDP, debt services, the employed labour force and investment using the time series concepts of unit roots, cointegration, error correlation and causality. Our findings suggest that debt-servicing has a negative impact on the productivity of both labour and capital, and that in turn has adversely affected economic growth. By severely constraining the ability of the country to service debt, this lends support to the debt-overhang hypothesis in Pakistan. The long run relation between debt services and economic growth implies that future increases in output will drain away in form of high debt service payments to lender country as external debt acts like a tax on output. More specifically, foreign creditors will benefit more from the rise in productivity than will domestic producers and labour. This suggests that domestic labour and capital are the ultimate losers from this heavy debt burden.

PUBLIC EXTERNAL DEBT AND ITS IMPACT ON EXCHANGE RATE IN NIGERIA

2020 ◽  
Vol 8 (1) ◽  
pp. 25-39
Author(s):  
Aigbedion Marvelous ◽  
◽  
Iyakwari Baba ◽  
Mairana Audu ◽  
◽  
...  
Keyword(s):  
Exchange Rate ◽  
Percent Level ◽  
External Debt ◽  
Secondary Data ◽  
Ordinary Least Squares ◽  
Foreign Reserve ◽  
Long Run ◽  
Short Run ◽  
Level Of Significance ◽  
The Impact

The study is an attempt to empirically examine the impact of public external debt on exchange rate in Nigeria. The nature of data for this study is secondary data and the major source of data is the Statistical Bulletin published annually by the Central Bank of Nigeria (CBN) December, 2018.The study used Ordinary Least Squares (OLS) and Error Correction Model (ECM) tools of analysis in the investigation of the impact and relationship among the economic variables. The long and short run results confirmed that public external debt has impact on exchange rate in Nigeria. However, based on the probability value at the short run all independent variables were statistically significant in explaining variation in Exchange Rate in Nigeria except Foreign Reserve in Nigeria (FRN) at 5 percent level of significance. While, at the long run the External Debt in Nigeria (EXDTN), Debt Service Payment in Nigeria (DSPN) and Foreign Reserve in Nigeria (FRN) Foreign Reserve in Nigeria (FRN) was statistically significant in explaining the variation in Exchange Rate in Nigeria (EXCHR) at 5 percent level of significance. Therefore, the study recommends that Government should increase the mechanism to check and control the allocation and implementation of public funds in Nigeria to reduce deficit budget and exchange rate in Nigeria.

THE IMPACT OF EXCHANGE RATE, FISCAL DEFICIT AND TERMS OF TRADE ON EXTERNAL DEBT OF PAKISTAN: A Cointegration and Causality Analysis

2011 ◽  
Vol 01 (03) ◽  
pp. 10-24
Author(s):  
Asma Awan ◽  
Nabeela Asghar ◽  
Hafeez ur Rehman
Keyword(s):  
Exchange Rate ◽  
Foreign Debt ◽  
External Debt ◽  
Terms Of Trade ◽  
Fiscal Deficit ◽  
Causality Analysis ◽  
Long Run ◽  
Short Run ◽  
The Stability ◽  
The Impact

The massive debt burden of Pakistan calls for a detailed analysis of trends in the foreign debt levels, its causative factors and implications for economic growth. The present study is an attempt to analyze the relationship between external debt and exchange rate, fiscal deficit and deterioration of terms of trade for the period 1974-2008. Using Johansen approach, the study found significant long-run relationship between external debt and exchange rate and deterioration of terms of trade. The results of the study revealed that fiscal deficit had no significant impact on external debt. In the short-run all the variables failed to establish relationship with external debt. However, the existence of long-run causality was observed and three channels of uni-directional causalities were found actively running from (i) fiscal deficit to external debt, (ii) terms of trade to exchange rate, and (iii) fiscal deficit to terms of trade. Diagnostic test confirmed the validity of the model and CUSUM and CUSUMSQ test revealed the stability of the model.

scholarly journals External Debt Burden and Infrastructural Development Nexus in Nigeria: An ARDL Approach (1981-2020)

2021 ◽  
Author(s):  
Chinonye Emmanuel Onwuka
Keyword(s):  
Exchange Rate ◽  
Interest Rate ◽  
Inflation Rate ◽  
External Debt ◽  
Granger Causality Test ◽  
Causality Test ◽  
Debt Burden ◽  
Infrastructural Development ◽  
Long Run ◽  
Domestic Debt

Abstract This study focused on external debt burden and infrastructural development nexus in Nigeria using data spanning between the periods 1981 to 2020 by employing the use of Autoregressive Distributed Lag Model (ARDL) and granger causality test as the major statistical techniques of analysis. From the findings, the coefficient of error correction term shows that about 70 percent of the discrepancy between the actual and the long run or equilibrium value of infrastructural development is corrected or eliminated each year. The coefficient of determination (R2) is 0.680 which shows that about 68 percent variations in the infrastructural development were explained by the independent variables. The Augmented Dickey Fuller (ADF) unit root test shows that all variables were stationary at first difference. The results for the Bounds test reveal that there is a long run relationship among the variables. This is because the F-statistics value (5.194) is greater than upper Bounds critical values at 5% level of significant. The ARDL results show that external debt, domestic debt and inflation rate have a negative impact on infrastructural development in the long run while exchange rate and interest rate has a positive effect on infrastructural development in the long run. Also, domestic debt and exchange rate were found to have a significant impact on infrastructural development while external debt, inflation rate and interest rate were found to be insignificant in the long run. Furthermore, the granger causality test results indicate while there is no causality between external debt and infrastructural development, there seems to be a unidirectional causality between domestic debt and infrastructural growth in Nigeria. The study concludes that federal government of the country should cut down excessive borrowings and that the existing ones are invested in projects that would eventually generate enough returns to defray such debts accordingly. Also, an adoption of policy framework that will ensure macroeconomic stability such as price stability, job creation, increased output, political stability, etc. becomes fundamental in getting rid of heavy reliance on external debt in the country.

The long-run stability of a small, open economy under crawling peg regime

2002 ◽  
Vol 52 (1) ◽  
pp. 57-78
Author(s):  
S. Çiftçioğlu
Keyword(s):  
Exchange Rate ◽  
Open Economy ◽  
Risk Premium ◽  
Small Open Economy ◽  
Exchange Rate Policy ◽  
Price Stability ◽  
Output Stability ◽  
Long Run ◽  
The Exchange Rate ◽  
The Impact

The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

Impact of exchange rate and oil price on the yield of sovereign bond and sukuk: Evidence from Malaysian capital market

2017 ◽  
Vol 5 (4) ◽  
pp. 27
Author(s):  
Huda Arshad ◽  
Ruhaini Muda ◽  
Ismah Osman
Keyword(s):  
Exchange Rate ◽  
Capital Market ◽  
Time Series Data ◽  
Oil Prices ◽  
Oil Price ◽  
Series Data ◽  
Sovereign Bond ◽  
Long Run ◽  
Short Run ◽  
The Impact

This study analyses the impact of exchange rate and oil prices on the yield of sovereign bond and sukuk for Malaysian capital market. This study aims to ascertain the effect of weakening Malaysian Ringgit and declining of crude oil price on the fixed income investors in the emerging capital market. This study utilises daily time series data of Malaysian exchange rate, oil price and the yield of Malaysian sovereign bond and sukuk from year 2006 until 2015. The findings show that the weakening of exchange rate and oil prices contribute different impacts in the short and long run. In the short run, the exchange rate and oil prices does not have a direct relation with the yield of sovereign bond and sukuk. However, in the long run, the result reveals that there is a significant relationship between exchange rate and oil prices on the yield of sovereign bond and sukuk. It is evident that only a unidirectional causality relation is present between exchange rate and oil price towards selected yield of Malaysian sovereign bond and sukuk. This study provides numerical and empirical insights on issues relating to capital market that supports public authorities and private institutions on their decision and policymaking process.

Dampak Insentif Pajak Perumahan Terhadap Potensi Penerimaan Pajak Negara Dan Peningkatan Pendapatan Masyarakat : Kasus Provinsi Papua

2016 ◽  
Vol 1 (1) ◽  
pp. 13-22
Author(s):  
Towaf Totok Irawan
Keyword(s):  
Low Income ◽  
House Prices ◽  
Tax Incentives ◽  
High Price ◽  
Short Term ◽  
Primary Input ◽  
State Revenue ◽  
Long Run ◽  
The Government ◽  
The Impact

Until now the government and private sector have not been able to address the backlog of 13.5 million housing units for ownership status and 7.6 million units for residential status. The high price of land has led to the high price of the house so that low-income communities (MBR) is not able to reach out to make a home purchase. In addition to the high price of land, tax factors also contribute to the high price of the house. The government plans to issue a policy for the provision of tax incentives, ie abolish VAT on home-forming material transaction. This policy is expected to house prices become cheaper, so the demand for housing increases, and encourage the relevant sectors to intensify its role in the construction of houses. It is expected to replace the lost tax potential and increase incomes. Analysis of the impact of tax incentives housing to potential state revenue and an increase in people's income, especially in Papua province is using the table IO because in addition to looking at the role each sector can also see the impact on taxes (income tax 21 Pph 25 Pph, VAT), and incomes (wage). Although in the short-term impact is still small, but very rewarding in the long run. Keywords: Backlog, Gross Input, Primary Input, Intermediate Input

scholarly journals Mobile Money Use: The Impact of Macroeconomic Policy and Regulation

Economies ◽  
2021 ◽  
Vol 9 (2) ◽  
pp. 51
Author(s):  
Lorna Katusiime
Keyword(s):  
Exchange Rate ◽  
Interest Rates ◽  
Financial Innovation ◽  
Macroeconomic Policy ◽  
Mobile Money ◽  
Distributed Lag ◽  
Distributed Lag Model ◽  
Long Run ◽  
Short Run ◽  
The Impact

This paper examines the effects of macroeconomic policy and regulatory environment on mobile money usage. Specifically, we develop an autoregressive distributed lag model to investigate the effect of key macroeconomic variables and mobile money tax on mobile money usage in Uganda. Using monthly data spanning the period March 2009 to September 2020, we find that in the short run, mobile money usage is positively affected by inflation while financial innovation, exchange rate, interest rates and mobile money tax negatively affect mobile money usage in Uganda. In the long run, mobile money usage is positively affected by economic activity, inflation and the COVID-19 pandemic crisis while mobile money customer balances, interest rate, exchange rate, financial innovation and mobile money tax negatively affect mobile money usage.

Open Door System and Endogenous Growth in Indian Economy: An Empirical Analysis on the Role of Human Capital and R&D in Explaining Industrial Productivity

2021 ◽  
Vol 46 (1) ◽  
pp. 24-37
Author(s):  
Arjun K. ◽  
Sanjay Kumar ◽  
A. Sankaran ◽  
Mousumi Das
Keyword(s):  
Human Capital ◽  
Exchange Rate ◽  
Real Exchange Rate ◽  
Endogenous Growth ◽  
Value Added ◽  
Capital Formation ◽  
Knowledge Capital ◽  
Test Technique ◽  
Long Run ◽  
The Impact

The present study investigates the impact of human capital, knowledge capital which is a function of human capital, and real exchange rate scenario in explaining long-run industrial total factor productivity (TFP) from 1980 to 2015 on the theoretical basis of the open endogenous growth model. The variables employed in the contemporary study include manufacturing value added (MNVA) as industrial output measure, gross fixed capital formation (GFCF) as a measure of capital and labour input which is measured using employment data. Gross enrolment ratio (GER) is taken as a measure for human capital formation, expenditure on research and development (R&D) as a proxy for knowledge capital, and real exchange rate indicates global economic shocks. The study involves estimating TFP for Industrial Sector during the post-liberalization period by employing Cobb-Douglas production function. The ARDL bounds test technique for cointegration revealed long-run relation among the varying factors studied. The Toda-Yamamoto causality test concluded bi-directional causality running between, R&D expenditure and Industrial TFP which sends a strong signal to the policymakers for a well-framed long-term integrated approach for human & knowledge capital formation which will act as a strong impetus for manufacturing firms to come up in terms of augmenting production and productivity and expanding foreign market horizon. JEL Classification: D24, E2, J24

scholarly journals Exploring the Road to Agricultural Sustainability by Assessing the EU Debt Influencing Factors

2018 ◽  
Vol 10 (7) ◽  
pp. 2465
Author(s):  
Laura Brad ◽  
Gabriel Popescu ◽  
Alina Zaharia ◽  
Maria Claudia Diaconeasa ◽  
Daniela Mihai
Keyword(s):  
Poverty Reduction ◽  
Fixed Costs ◽  
The European Union ◽  
Labor Costs ◽  
Short Term ◽  
Total Debt ◽  
Long Run ◽  
Periodic Analysis ◽  
The Impact

The importance of agricultural financing in ensuring food security and safety, jobs, poverty reduction, economic growth and more recently, climate change mitigation, natural resource conservation and sustainable development imposes periodic analysis of the factors which might influence the farmers’ financial situation, in order to improve it. One way of assessing this is to analyze the agricultural debt. In this context, based on previous models, the paper aims to assess the impact of specific factors on the agricultural debt level in the European Union during 2008–2015, as these should be considered in future common agriculture policies as well as in achieving sustainable agriculture. The research was conducted based on econometric techniques, by applying panel models in the Eviews 7.0 software-64 bit version. More than 20 variables were considered in the analysis. Some of the findings suggest that an increase in subsidies as well as the share of cash flow in the total existing capital would determine considerable reductions of the total debt. Decoupled subsidies seem to have a higher impact than coupled subsidies on short term debt, while its value is between the one found for coupled subsidies in the case of long term debt. Large farms/companies, to which decoupled payments are granted, have higher debts on long run and on total debt. The same units, to which coupled subsidies were granted, have smaller short-term debt. In contrast, the increases of labor costs, fixed costs, and crop/livestock costs lead to an increase in the total debt, since the farms require additional financial resources to cover the expanded costs. Also, the results suggest that short-term debts are mainly formed of long-term loans that reached maturity. In this case, the authors support the idea of differentiated financing programs for the agricultural activities because of their peculiarities and reinforced by the need to turn the intensive agriculture into a sustainable and plentiful one.

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