Moderating effect of Public Debt on the Relationship between Public Spending on Transfers and Economic Growth in Nigeria

Abstract

Despite government's effort to improve fiscal frameworks in Nigeria, economic growth has been slower than expected. To ascertain the contribution of public spending on transfers to this condition, this study investigates the relationship between public spending on transfers and economic growth, and tests the moderating role of public debt on the relationship. With data sourced from the Central Bank of Nigeria (1981-2022), the study supported its descriptive statistics with the Generalized Method of Moments (GMM) technique, and estimated that though public spending on transfers has a positive impact on economic growth, this impact is influenced by public debt. The findings suggest that public spending on transfers and prudent public debt management can stimulate economic growth, hence, the study recommendations for strategic fiscal accountability via improved public debt management, and more efficient public spending on transfers.

Keywords: Economic Growth, Fiscal Accountability, Public Debt, Public Spending on Transfers