Impact Assessment of External Debt and Exchange Rate on Economic Growth in Nigeria.

Abstract

The study examined the effect of external debt and exchange rate on economic growth in Nigeria. The study used Autoregressive Distributed Lag Model and Granger causality test. The results show that the coefficient of determination (R²) the percentage of variations in the dependent variable that can be explained by the independent variables. The R² of 0.340003 or 34% showed that Economic development can be explained by changes in the explanatory variables as shown in the model and the remaining 66% is explained by the dummy variable. The F-statistic which measures the overall significance of the model indicated that it is significant at 5%. This is indicated by the F-statistics and its probability (3.348527 and 0.024437) respectively. We therefore conclude that there is a significant effect of External Debt and Exchange Rate on economic development in Nigeria. This study therefore recommends among other things that Government should make sure that all resources borrowed should be used for the purpose it was collected for and that any person found diverting the loan collected into his pocket for selfish interest should be prosecuted.