(Department of banking and finance, nasarawa state university keffi, 2014-10-03) Aliyu, Yusuf Mohammed
The study examined the causal relationship between domestic debt and economic grow thin
Nigeria between 1970 and 2012 using Regression and Vector Error Correction (T E C) models.
Secondary data was collected from central bank statistical butte tin 2012. The variables used
in the study were tested for stationary using the Augmented Dickey Fuller and the result
showed that the variables are stationary> at first difference. Co-integration test• was also
performed and the result revealed the presence of co-integration between domestic debt and
economic growth. The co-integration results determined the appropriateness of
methodological test for causality.' The findings of the VEC model revealed a unidirectional
causality between domestic debt and economic growth in Nigeria. The study recommends
that eminent should strive to finance budget deficit by improving on the present revenue
base. This can be Achieved by improving its revenue sources and efficient pursuit of tax
reforms, and that go should reduce extra budgetary activities, which most often are
not used for the intended project.