Impact of External Debt Stock on Unemployment Response in Nigeria

Central Bank of Nigeria - Economic and Financial Review, 54 (3), 32-43, September 2016

81 Pages Posted: 21 Aug 2017 Last revised: 25 Dec 2018

See all articles by Ebele Nwokoye

Ebele Nwokoye

Nnamdi Azikiwe University - Department of Economics

Nneamaka Ilechukwu

Southern Illinois University at Carbondale, Department of Economics

Uzodigwe Anthony

affiliation not provided to SSRN

Akachukwu A Okonkwo

affiliation not provided to SSRN

Date Written: 2016

Abstract

Debt servicing is a concern because full-employment is unsustainable except the structure of capital reach a certain threshold. This study examined the impact of to external debt on unemployment in Nigeria through the investment channel. The study adopted a system of equation approach where unemployment and investment are treated as mutually dependent variables in a two stochastic-equations model. The model was estimated using indirect least squares method. The findings show that external debt stock negatively but significantly affected unemployment indirectly through domestic investment. The main lesson derived herein is that external debt does not impact positively on the Nigerian economy because as external debt stock mounts, domestic investment is depressed due to crowding-out effects of debt service payments on domestic funds.

Note: Under review with CBN Economic and Financial Review

Keywords: Domestic Investment, External Debt, Nigeria, Unemployment

JEL Classification: E60, H63, 055

Suggested Citation

Nwokoye (nee Nwabude), Ebele and Ilechukwu, Nneamaka and Anthony, Uzodigwe and Okonkwo, Akachukwu A, Impact of External Debt Stock on Unemployment Response in Nigeria (2016). Central Bank of Nigeria - Economic and Financial Review, 54 (3), 32-43, September 2016. Available at SSRN: https://ssrn.com/abstract=3022789

Ebele Nwokoye (nee Nwabude) (Contact Author)

Nnamdi Azikiwe University - Department of Economics ( email )

Enugu-Onitsha Expressway
Nnamdi Azikiwe University
Awka, Anambra
Nigeria

HOME PAGE: http://www.unizik.edu.ng/profile/nwokoyees

Nneamaka Ilechukwu

Southern Illinois University at Carbondale, Department of Economics ( email )

Carbondale, IL
United States

Uzodigwe Anthony

affiliation not provided to SSRN

Akachukwu A Okonkwo

affiliation not provided to SSRN

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