The Dynamics of Monetary and Fiscal Policy as a Tool for Economic Growth: Evidence from Nigeria

Ogege, Samson; Shiro, Abass A.

doi:10.5539/jms.v2n2p247

Cited by 10 publications

(10 citation statements)

References 1 publication

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“…Similarly, the estimated result shows that government revenue and economic growth have a significant positive relationship in Nigeria in the short run but the relationship becomes negative in the long run, though not significant. This finding is in line with the submission of Falade and Folorunsho [8], Ogege and Shiro [9] in related studies but different methodologies in Nigeria. However, recurrent expenditure has a significant negative relationship with economic growth in the short run but the result becomes insignificant in the long run.…”

Section: Resultssupporting

confidence: 91%

“…This conclusion is supported by the propositions of Nworji, Okwu, Obiwuru, and Nworji [21] Medee and Nenbee [23], Wu, Tang, and Lin [23] and Philip [24]. But contradicts the submission of Omitogun and Ayinla [9]…”

Section: Resultsmentioning

confidence: 77%

“…The authors discovered that the current level of exchange rate and its immediate past level, domestic interest rate, current level of government revenue and current level of money supply are the appropriate policy instrument mix in propelling growth of the Nigerian economy in the short and long run. Similarly, Ogege and Shiro [9] analyzed the dynamics of monetary and fiscal policies on economic growth in Nigeria. The study concluded that both monetary and fiscal policy brought about economic growth in the country.…”

Section: Literature Reviewmentioning

confidence: 99%

See 2 more Smart Citations

Fiscal Policy and Economic Growth in Nigeria: An ARDL, Bound Test and ECM Approach

Olubunmi¹,

John²,

Ololade³

et al. 2019

SJBMS

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The aim of this study is to examine the relationship between fiscal policy and economic growth in which past studies have not fully explored in Nigeria. Data was collected from the Central Bank of Nigeria Statistical Bulletin from 1990 to 2017 and the study employed the Autoregressive Distributed Lag (ARDL) model and Error Correction Model (ECM) to address its objective. Consequently, the major findings that originated from the work could be submitted as follows. The result of ECM term confirmed that about 39% of the total disequilibrium in the previous year would be corrected in the current year. Therefore, it will take about two (2) years for the system to adjust back to its long run equilibrium path. Meanwhile, the estimated result shows that economic growth and government revenue have a significant positive relationship in Nigeria in the short run but the relationship becomes negative in the long run. However, recurrent expenditure has a significant negative relationship with economic growth in the short run but the relationship becomes insignificant in the long run. However, inflation rate has a significant positive relationship with economic growth in both short run and long run. Due to the findings that originated in this study, this paper makes the following recommendations for the policy makers in Nigeria that if the economic growth is the target of the policy makers, manipulating fiscal policy variables such as government revenue, capital expenditure and inflation rate appropriately will increase economic growth in the short run and the long run.

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Section: Resultssupporting

confidence: 91%

Section: Resultsmentioning

confidence: 77%

Section: Literature Reviewmentioning

confidence: 99%

See 1 more Smart Citation

Fiscal Policy and Economic Growth in Nigeria: An ARDL, Bound Test and ECM Approach

Olubunmi¹,

John²,

Ololade³

et al. 2019

SJBMS

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show abstract

“…The paper concluded that fiscal and monetary policies had galvanized government to commit budgetary management which would also address anomalies in the financial system. Ogege and Shiro (2012) however, investigated the dynamics of Nigeria's monetary and fiscal policies, focusing specifically on their effects on the growth of Nigerian economy. The study revealed that both monetary and fiscal policy contributed to the growth of Nigerian economy.…”

Section: Empirical Reviewmentioning

confidence: 99%

Monetary – Fiscal Policy Mix: A Tool for Economic Stabilization in Nigeria

Agbonkhese

Oligbi

2020

International Journal of Social Sciences Perspectives

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The study examined empirically the relationship between monetary-fiscal policy mix and Nigeria's economic stability. The Johansen cointegration technique complemented with VECM were employed to achieve the objective of the study. The result of the descriptive statistics revealed that the variables were normally distributed and the degree of variability of them was good as evident from the Jarque-Bera statistics and standard deviation. The Johansen and Juselius co-integration results revealed that both the trace statistic and maximum Eigenvalue statistic confirmed the existence of co-integrating equations among the variables of interest. It was evident that the trace test indicated six cointegrating equations while maximum Eigenvalue test revealed four cointegrating equations in the model, as the null hypothesis of no cointegration was rejected. These results suggested that there was a unique long run equilibrium relationship among the variables. The VECM result indicated that there was a long run relationship between the variables concerned. The result further showed that monetary-fiscal indicators have not made much significant contributions to the growth of the Nigerian economy as well as economic stabilization in Nigeria. The study recommended the entrenchment of fiscal discipline as a result of destabilizing effect of government's fiscal activities due to its fiscal irresponsibility in Nigeria. Also recommended was that monetary policies should be structured to lower lending interest rate and raise interest rate on saving deposits so as to increase the availability of loanable funds which will in turn boost investment and stimulate economic growth.Funding: This study received no specific financial support Competing Interests: The authors declare that they have no competing interests. Acknowledgement: The authors are deeply grateful to the anonymous referees of this paper who made comments that were very useful in revising and improving the quality of the paper. We say thank you all.

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“…While some scholars advocated for a sharp departure from monetary policy targeting to inflation targeting, others recommended the hybrid of both as being practiced in Kenya (Kamaan, 2014). Yet, others have called for a complete reformation of policies where fiscal and other potent measures be used as compliments to monetary policy (Akujuobi, 2010; Onoh, 2002; Fasanya and Onakoya, 2013; Ogege and Shiro, 2012).…”

Section: A Review Of Related Literaturementioning

confidence: 99%

A dynamic regression panel approach to the determinants of monetary policy and economic growth

Olamide

Maredza

2019

AJEMS

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Purpose Empirically, the purpose of this paper is to investigate policy variables that determine monetary policy and economic growth of some selected countries within the economic bloc of Southern Africa Development Community (SADC). The selected countries are Botswana, Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe. Design/methodology/approach Annual time series data for a panel of 11 Southern African countries spanning 1980–2015 were employed in the study. The major instrument of estimation is the dynamic regression panel model. In order to conform to econometric principles, robustness checks were carried out on the variables of interest so as to avoid spurious results. An estimation of impulse response and variance decomposition analyses were to complement the approach to the study. Findings The result of the long-run dynamic panel regression reveals that GDP growth rate, inflation rate, exchange rate, money supply and oil and commodity prices do have profound impact on monetary policy within SADC. It was further revealed from the study that commodity price shock is the major exogenous determinant of monetary policy dynamics and the effect is transmitted via exchange rate channel to macroeconomics of the region; with inflation rate and money supply playing a major role in the transmission mechanism as it affects the economies of the countries in this region. Practical implications The policy implication is that inflation is seen as a major challenge to the countries under review. Among other things, a hybrid of inflation and monetary targeting should be adopted to complement each other as policy combination within the region. Originality/value The study accounts for the determinants of monetary policy vis-à-vis growth potentials of some selected countries in SADC, using a combination of dynamic regression panel approach and SVAR elements.

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The Dynamics of Monetary and Fiscal Policy as a Tool for Economic Growth: Evidence from Nigeria

Cited by 10 publications

References 1 publication

Fiscal Policy and Economic Growth in Nigeria: An ARDL, Bound Test and ECM Approach

Fiscal Policy and Economic Growth in Nigeria: An ARDL, Bound Test and ECM Approach

Monetary – Fiscal Policy Mix: A Tool for Economic Stabilization in Nigeria

A dynamic regression panel approach to the determinants of monetary policy and economic growth

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