Exploring The Debt Laffer Curve: Evidence From Nigeria’s Public Debt And Sustainable Economic Growth Nexus (1970-2022)

Abstract

This study explores the debt Laffer curve hypothesis in the relationship between public debt and sustainable economic growth over the study period 1970 to 2022 in Nigeria. The estimation methods employed are quadratic autoregressive distributed lag (ARDL) and structural quadratic autoregressive distributed lag. The ARDL results revealed that debt Laffer curve hypothesis prevailed in the nexus between total, internal and external between public debt and sustainable economic growth in the long run respectively, whereas the structural ARDL results showed that debt Laffer curve prevailed in the nexus between external public debt and long run sustainable economic growth during 1999-2022 only in Nigeria. Going forward, Government should discourage public debt on short-run but cautiously seek public debt in the long run. Furthermore, Government should consolidate on massive human capital development and capital formation investment as well as effective utilization of petroleum earnings to achieve a  sustainable economic growth at  short-run and long run in Nigeria.