THE PASS-THROUGH EFFECT OF PUBLIC DEBT ON PRIVATE DOMESTIC INVESTMENT IN NIGERIA (1960-2019)

Abstract

This study examined the pass-through effect of public debt on private domestic investment in Nigeria over the period 1960 to 2019. The study adopted the Non-linear Auto Regressive Distributed Lag (NARDL) approach to investigate the direct and indirect impact of public debt on private domestic investment in Nigeria. Findings established that increase in public debt had greater indirect crowding-out effects on private domestic investment than crowding-in effect of increases in public debt, both in the long run and in the short run. The study recommended that public debt be reduced in Nigeria by identifying and utilizing other viable locally sourced resources for private domestic investments.