Public external debt and exchange rate dynamics in nigeria 1996-2014


The study investigated the impact of external debt on exchange rate dynamic in Nigeria for the period 1996-2014. Time series data on external debt stock and external debt service was used to capture external debt burden. The study set out to test for both a long run and causal relationship between external debt and exchange rate dynamic in Nigeria. An empirical investigation was conducted using time series data on Real Gross Domestic Product, External Debt Stock, External Debt Payments and Exchange Rate from 1996-2014. The techniques of Estimation employed in the study include Augmented Dickey Fuller (ADF) test, Johansen Co-integration, Vector Error Correction Mechanism and Granger Causality Test. The results show an insignificant long run relationship and a bi-directional relationship between external debt and exchange rate dynamic in Nigeria. The study therefore, recommends that external debts should be contracted solely for economic reasons and not for social or political reasons. This is to avoid accumulation of external debt stock overtime and prevent an obscuring of the motive behind external debt. Similarly, the authorities responsible for managing Nigeria’s external debt should adequately keep track of the debt payment obligations and the debt should not be allowed to pass a maximum limit so as to avoid debt overhang.






mso-fareast-font-family:"Times New Roman"">1.1              Background to the study

1.2       Statement of the problem

    1.3        Objectives of the study

"Times New Roman"">1.4              bold"> Research questions

1.5        Research hypothesis

1.6        Research methodology

1.7        Significance of the study

1.8         Scope of the study

1.9         Plan of the study







2.1 Conceptual framework

            2.1.1 the concept of external debt

            2.1.2 the concept of exchange rates

2.2 theoretical frameworks

mso-fareast-font-family:"Times New Roman";mso-bidi-font-weight:bold">2.3.1        bold">Review of external debt theory

mso-fareast-font-family:"Times New Roman"">2.3.2        bold">the dual-gap theory

mso-fareast-font-family:"Times New Roman"">2.3.3        bold">external debt and economic growth

            mso-bidi-font-weight:bold">2.3.2    Review of external debt theory

            2.3.3    Exchange rate determination models

            2.3.4    Flexible price monetary model


            2.3.5 sticky-price monetary model

            2.3.6 Equilibrium model and liquidity model

            2.3.7 Portfolio balance model


2.4       Origin of Debt Crisis in LDCs

            2.4.1 Why countries borrow

            2.4.2 Origin of Nigeria’s external debt

            2.4.3 Causative factors of Nigeria’s external debt

            2.4.4 Nigeria’s external debt profile

2.5       External debt management in Nigeria

            2.5.1 External debt management strategies.

            2.5.2 Nigeria external debt servicing


            2.5.3 Nigerian external debt rescheduling and restructuring

2.6       Literatures on External Debt Management of Nigeria


2.7       An Overview of Exchange Rate Regimes

            2.7.1    The gold standard regime

            2.7.2    Flexible exchange rate regime

            2.7.3     The crawling peg regime

            2.7.4      The managed float regime

            2.7.4     the European monetary system

mso-fareast-font-family:"Times New Roman"">2.8              An evaluation of exchange rate regimes in Nigeria 

            2.8.1 Exchange rate determinants

mso-fareast-font-family:"Times New Roman"">2.9              Empirical Literature

            2.9.1    Nigerian studies







bold">3.1 Introduction


bold">3.2 Theoretical Framework


bold">3.3 research methodology


bold">            3.3.1 Model specification



bold">3.3.2 Techniques of estimation


bold">3.4 data sources, definitions and measurements


bold">            3.4.1 Data sources


bold">            3.4.2 Data definitions









mso-bidi-font-weight:bold">4.1 Introductions

mso-bidi-font-weight:bold">4.2 Descriptive Analysis

bold">4.3 Trend Analysis


bold">4.4 Econometric Analysis


mso-bidi-font-weight:bold">            4.4.1 Unit root test

mso-bidi-font-weight:bold">            4.4.2 Johansen co-integration test

mso-bidi-font-weight:bold">            4.4.3 Error correction estimates using vector error correction model

mso-bidi-font-weight:bold">            4.4.4 Granger causality test


bold">4.5 Conclusion


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Lamidi, M. (2018). Public external debt and exchange rate dynamics in nigeria 1996-2014. Afribary. Retrieved from

MLA 8th

Lamidi, Murtala "Public external debt and exchange rate dynamics in nigeria 1996-2014" Afribary. Afribary, 29 Jan. 2018, Accessed 23 May. 2024.


Lamidi, Murtala . "Public external debt and exchange rate dynamics in nigeria 1996-2014". Afribary, Afribary, 29 Jan. 2018. Web. 23 May. 2024. < >.


Lamidi, Murtala . "Public external debt and exchange rate dynamics in nigeria 1996-2014" Afribary (2018). Accessed May 23, 2024.

Document Details
Field: Economics Type: Project 95 PAGES (21660 WORDS) (docx)