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THE IMPACT OF MONETARY AND FISCAL POLICIES ON NIGERIAN ECONOMIC GROWTH: 1990-2010.
Abstract
Monetary and fiscal policies have been established by several scholars to have contributed to economic growth of any nation. This paper focused on the identifying policy that contributed effectively to the level of economic growth in Nigeria. Data were collected from the CBN statistical bulletin covering the period of 21years. Unit root test, co integration, VAR model and graph were some of the econometrics techniques used for data estimation. Phillip-perron test statistic revealed that the time series properties of the variables attained stationarity at first order. The variables were co integrated at at most 1 with at least 2 co integrating equations. The individual variable: Minimum Rediscount Rate (LNMRR), Interest Rate (LNIR), Liquidity Rate (LNLR), Cooperate Income Tax (CIT) and Federal budget were not statistically significant to Gross Domestic Product (LNGDP) in the previous and current year. However, interest rate and liquidity rate impacted negatively on the GDP but minimum rediscount rate cooperate income tax and federal budget affect the GDP positively. Monetary and fiscal policies measures are jointly statistically significant to level of economic growth in Nigeria. The reaction of money and fiscal policies measure on the level of economic growth in Nigeria was found to be unstable over the years of study which indicated no long run relationship. However, the study further revealed that fiscal policy measures are more effective in gearing economic growth in Nigeria. The study recommended that there should be effective strategic policies that enhance better fiscal policy implementation in Nigeria that will in the long run contribute to the national economic growth and also more robust and viable monetary policy measures should be made to achieve sound economic growth.
Keywords: Monetary Policy, Fiscal Policy, Economic Growth, Co-integration, VAR model.