ABSTRACT

The study sought to investigate the impact of disaggregated domestic debt instruments on economic growth of Nigerian. The Augumented Dickey Fuller Test, Multiple linear regression method and granger causality test was applied to annual Nigerian data spanning 1981-2015. The study indicated that treasury bills have a positive relationship and significant impact on economic growth while treasury bonds have a positive relationship and insignificant impact on economic growth. Development stock has a negative relationship and insignificant impact on economic growth. The control variables lending interest rate, inflationary pressure measured by consumer price index and exchange rate all have a negative relationship and insignificant impact on GDP except exchange rate. Money supply has a positive relationship and significant impact on economic growth. The result of the causality test shows that there exists a bidirectional relationship between treasury bills and GDP. The study concluded that the treaury bills and treasury bonds has a positive impact on economic growth in Nigeria. The study futher recommends that in the long run government should find a way to correct persistent budget deficit by diversifying the economy because in the long run both domestic and external debt are not sustainable.