Growth, dependence, and welfare in the Third worldâ, American Sociological Review, 59(5), pp. In other words, most past developing countries’ studies focused on the effect of government deliberate monetary and fiscal policies on economic growth and development while ignoring, the fundamentals of both tools. It does not work! Odetola, T. and Etumnu, C. (2013) Contribution of agriculture to economic growth in Nigeria 1. This study uses secondary data which were obtained from the Statistical Bulletin of the Central Bank of Nigeria (CBN) covering the period from 1985 to 2015. (Siyan and Debayo, 2015) . 1, No. Create a free website or blog at WordPress.com. 424â441. The study examined the empirical link on the effect of fiscal and monetary policy on the Economic Growth of Nigeria (1986-2010). Impact of fiscal policy on Nigeria economic growth within the period of 1981-2016. 3.3 Monetary policy in Nigeria Monetary policy influences the money supply through adjustments of the interest rates, bank reserve requirements, and the sale of government securities and foreign exchange (Mark Horton and Asmaa El-Ganainy, 2009). Ibietan, J. and Ekhosuehi, O. Available at: https://www.imf.org/external/pubs/ft/wp/2003/wp03155.pdf (Accessed: 2 June 2016). A few studies report positive and significant relation between government spending and economic growth while several others find significantly negative or no relation between an increase in government spending and growth in real output. 1522â1542. The VAR model revealed that fiscal policy distorted real GDP but died out after one year, while monetary policy had no significant impact on real GDP. Firebaugh, G. and Beck, F.D. H 1:fiscal policy does have a significant impact on the economic growth of Nigeria. Hi3: Central Bank of Nigeria’s monetary and credit Policy guidelines and money supply do have impact on the level of outputs. & Education, 2(4), pp. Overall, the socio-economic and political milieu, including the legal framework under which the Central Bank of Nigeria has operated, was found to be the critical factor that influenced the outcome of monetary policy. 1â9. It explicitly assesses the impact of monetary policy on the real economy. Available at: http://www.aaawe.org/wp-content/uploads/2015/01/Tolulope_paper_mod.pdf (Accessed: 19 June 2016). The basic fiscal policy instruments are Government Expenditure and Tax revenue. download your complete project topic and materials with chapters 1 to 5 The researchers utilized ex-post facto research design using the time series data of the annual market values of All Share Index (ASI) of the Nigerian Stock Exchange (NSE). Change ), You are commenting using your Twitter account. Leith, C. and Wren-Lewis, S. (2000) âInteractions between monetary and fiscal policy rulesâ, The Economic Journal, 110. doi: 10.2307/2565725. That`s the biggest problem! This implies testing the effects of monetary and fiscal policy on economic growth and development taking into accounts the structure of monetary and fiscal policies. This paper discusses the evolution of monetary policy in Nigeria in the past four decades. (1970) âMonetary policyâ, Econometrica, 38(4), pp. 11th edn. dence indicates that monetary and fiscal policies in Nigeria have interacted in a counteractive manner for most of the sample period (1980-1994), while at other periods, no sym-metric pattern of interaction between the two policy vari-ables was observed. See below for the abstract, table of contents, list of figures, list of tables, list of appendices, list of abbreviations and chapter one. The study involves comparative analysis of the impact of fiscal policy on economic growth in Nigeria during regulation and deregulation periods. It made use of secondary data, from Central Bank of Nigeria statistical Bulletin, Chigbu, Emmanuel Ezeji Department of Management Technology (FMT) School of Management Technology Federal University of Technology, Owerri (FUTO) PMB 1526 Owerri, Imo State, Nigeria E-mail: sussychigbu@yahoo.com Njoku Michael Department of Management Technology (FMT) Park, Y.C. The effect of government spending on economic growth is still an unresolved issue theoretically as well as empirically. doi: 10.1016/j.jedc.2013.09.002. Monetary policy involves the management of money, the supply of money and interest rate. The paper is a current treatise of the topic with the scope spanning 1993 to 2013. doi: 10.2307/2096441. Available at: http://www.inter-reseaux.org/IMG/pdf_Nigeria_Economic_Reforms_Okonjo_2007.pdf (Accessed: 26 February 2016). Kirsanova, T., Leith, C. and Wren-Lewis, S. (2009) âMonetary and fiscal policy interaction: The current consensus assignment in the light of recent developmentsâ, The Economic Journal, 119. doi: 10.2307/40271411. Change ), You are commenting using your Google account. It had been some years ago since the fiscal policy was put together by the Nigerian government to see to all the needs highlighted earlier. The main objective is to analysis how various components of fiscal policy have contributed to the growth rate of the Nigerian economy. (2013) âTrends in development planning in Nigeria: 1962 TO 2012â, Journal of Sustainable Development in Africa, 15(4). Time series data were collected from the central bank of Nigeria (CBN), the international monetary fund (IMF) and the World Bank. (2016): (1996) Financial Sector Reforms and Monetary Policy in Nigeria. A CASE STUDY OF NIGERIA BREWERIES PLC ABA, Impact of effective public sector accounting on public financial management in Nigeria. According to Morakinyo, David and Alao (2018), the realization of this growth undoubtedly is not automatic but requires policy guidance, which are Fiscal and Monetary policy instruments which are the main instruments of achieving the macroeconomic targets. This study investigated the impact of fiscal and monetary policy on Nigerian economic growth from 1981 to 2015, with the interest in exploring which of fiscal or monetary policy has been effective in propelling economic growth in Nigeria and how GDP growth responds to the monetary and fiscal policy shock. Sci. doi: 10.2307/3132140. Although the theoretical positions on the subject are quite diverse, the conventional wisdom supports government spending as the cause for economic instability or stagnation. 179â198. This study investigated the impact of fiscal and monetary policy on Nigerian economic growth from 1981 to 2015, with the interest in exploring which of fiscal or monetary policy has been effective in propelling economic growth in Nigeria and how GDP growth responds to the monetary and fiscal policy shock. H 0 2:there is no significant relationship between fiscal policy and economic development in Nigeria. Nwaobi, G. (2012) M P RA monetary policies and Nigerian economy: Simulations from dynamic stochastic general equilibrium(DSGE)model. Using Ordinary Least Squares estimation, the study revealed that both interest rate and exchange rate, both proxies for monetary policy negatively affect non-oil exports. 461â477. 809â842. DFID (2008) Economic growth: The impact on poverty reduction, inequality, human development and jobs. Fiscal policies are pursued by state governments throughout the world and mainly related to spending and taxing programs. 251â262. The Impact of Fiscal and Monetary Policy on Nigerian Economic Growth. In a situation like this with such shallow financial system, the government institutions are underdeveloped (Akpapan, 1994). (2001) Information and the change in the paradigm in Economics. (2004) âInteractions of monetary and fiscal policy via open market operationsâ, The Economic Journal, 114. doi: 10.2307/3590317. Montiel, P. and Serven, L. (2006) âMacroeconomic stability in developing countries: How much is enough?â, The World Bank Research Observer, 21(2), pp. Available at: http://www.un.org/millenniumgoals/pdf/Think%20Pieces/12_macroeconomics.pdf (Accessed: 26 February 2016). Wong, K.-F. (2000) âVariability in the effects of monetary policy on economic activityâ, Journal of Money, Credit and Banking, 32(2), pp. 2223â4934. (1996) âMacroeconomic stability, investment and growth in developing countriesâ, Journal of Development Economics, 48(2), pp. November 24, 2020. and Fischer, S. (1994) âPolicy games: Coordination and independence in monetary and fiscal policiesâ, Brookings Papers on Economic Activity, 1994(2), p. 207. doi: 10.2307/2534656. Finally, the study recommends fiscal policy leadership and harmonization between the fiscal and monetary authority, with emphasis on channelling resources to where they are most needed. doi: 10.2307/2296357. Role of Monetary Policy in Nigeria. Nigeria is a country enormously gifted with both natural and human resources. Clark, W.R. and Hallerberg, M. (2000) âMobile capital, domestic institutions, and Electorally induced monetary and fiscal policyâ, The American Political Science Review, 94(2), pp. Umaru, A. and Zubairu, A.A. (2012) âAn empirical analysis of the contribution of agriculture and petroleum sector to the growth and development of the Nigerian economy from 1960-2010â, International J. Soc. H 0:fiscal policy does not have any significant impact on the economic growth of Nigeria. Out experts will give you an overview of monetary policy in Nigeria and why it does not work. The pool of resources from one end to the other is immeasurable to such an extent that given a vibrant and perceptive fiscal policy, economic growth, development … Aslanbeigui, N. and Wick, A. Nigeria is a country enormously gifted with both natural and human resources. 631â653. Available at: https://www.ids.ac.uk/files/dmfile/Wp68.pdf (Accessed: 15 June 2016). IMPACT OF MONETARY AND FISCAL POLICY IN CONTROLLING UNEMPLOYMENT IN NIGERIA Okwara, Cornelius. Friedman, M. (1972) âMonetary policyâ, Proceedings of the American Philosophical Society, 116(3), pp. (1981) âLikelihood ratio statistics for Autoregressive time series with a unit rootâ, Econometrica, 49(4), p. 1057. doi: 10.2307/1912517. Fiscal policy is used in gearing the economy towards achieving a variety of economic transformation such as economic development and growth, price stability, reduction in unemployment, external equilibrium as well as income redistribution (Agbarakwe, 2018). The security markets do not function properly; the central banks have no sufficient amount of tangible securities and adequate instruments of monetary control. Karadimitropoulou, A. and León-Ledesma, M. (2013) âWorld, country, and sector factors in international business cyclesâ, Journal of Economic Dynamics and Control, 37(12), pp. I want to regress the monetary and fiscal policies against each of the variable using co-efficient of regression. This study investigated the impact of fiscal and monetary policy on Nigerian economic growth from 1981 to 2015, with the interest in exploring which of fiscal or monetary policy has been effective in propelling economic growth in Nigeria and how GDP growth responds to the monetary and fiscal policy shock. Nordhaus, W.D., Schultze, C.L. and Kingston, G.H. Change ), You are commenting using your Facebook account. 517â524. Ozcicek, O. and McMillin, W.D. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. According to Agbarakwe,(2018), one of the main purposes of government spending is to provide infrastructural facilities. The positive impact of these policy tools on economic performance will help the country achieve sustained growth and while reducing economic instability. and Fuller, W.A. Stiglitz, J.E. Delta State Nigeria.. & Akujuobi, L.E (Ph.D) Department of Financial Management … 239â256. Benigno, P. and Woodford, M. (2003) âOptimal monetary and fiscal policy: A linear-quadratic approachâ, NBER Macroeconomics Annual, , pp. The Impact of Monetary and Fiscal Policies on Nigerian Economic Growth: 1990-2010. 57â66. Download the full project work below in an doc editable format. Joining the debate between George and Marshall on the effects of economic growth on the distribution of incomeâ, The American Journal of Economics and Sociology, 49(2), pp. (1977) âMonetary and fiscal policies under flexible exchange rates and perfect myopic foresight in an inflationary worldâ, The Scandinavian Journal of Economics, 79(4), pp. doi: 10.2307/1911620. significant in reducing the level of unemployment generation in Nigeria than monetary policy measure. 151â178. It is the demand side economic policy implemented by the government to achieve macroeconomic objectives like growth, consumption, liquidity and inflation. Okonjo-Iweala, N. and Osafo-Kwaako, P. (2007) Nigeriaâs economic reforms progress and challenges. Huang and Padilla (2002) wrote on fiscal policy and implementation of the Walsh Contract for Central Bankers. doi: 10.2307/3487441. Ivanov, V. and Kilian, L. (2005) âA practitionerâs guide to lag order selection for VAR impulse response analysisâ, Studies in Nonlinear Dynamics & Econometrics, 9(1). Baunsgaard, T. (2003) Fiscal Policy in Nigeria: Any Role for Rules? Dixit, A. and Lambertini, L. (2003) âInteractions of commitment and discretion in monetary and fiscal policiesâ, The American Economic Review, 93(5), pp. The study examined the impact of government fiscal and monetary policies on economic growth within the period of 33 years (1981-2014). THE IMPACT OF FISCAL POLICY ON THE NIGERIA ECONOMY CHAPTER ONE 1.0INTRODUCTION This investigates the three elements of fiscal policy (1) government spending, taxation and the other source of revenue which finance public spending and the resulting budget deficit or surplus which occurs wherever government expenditure does not exactly equal revenue. , You are commenting using your WordPress.com account Review, 59 ( 5,., C. ( 2013 ) Contribution of agriculture to economic growth is still an unresolved issue as! This study evaluates the relative impact of monetary and fiscal policy via open market operationsâ, the economic.. ( VAR ) was applied, and welfare in the Third worldâ, American Sociological Review, 59 5... Essi ( 2011 ) wrote on fiscal policy and its impact on the real.! Laid down by the Central Bank of Nigeria ’ s monetary and fiscal on. Stability, inclusive growth and while reducing economic instability Okwara, Cornelius N. and Osafo-Kwaako, P. ( 2007 Nigeriaâs! 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