An Empirical Analyses of the Effect of National Debt on Inflation Rate in Nigeria

This study reviewed the relationship between national debt and inflation rate in Nigeria using multiple linear regression and simple linear regression. Augmented-Dickey fuller test and Breusch-Pagan test were conducted to ascertain if my model follows the assumptions of ordinal linear regression (OLS). It was found that external debt and domestic debt in a multilinear model does not have any significant effect and/or relationship with inflation rate, while in a simple regression model (using national debt as predictor) does have a negative correlation with inflation rate. This supports the primary purpose for government borrowing, financing deficit budget for the prolonged growth and sustainability of the economy.