Fiscal and Monetary Policies Coordination and Economics Growth in Nigeria

Ishaku Rimamtanung Nyiputen; Osang Paul Abijia; Orji Alexander Chinedu

Ishaku Rimamtanung Nyiputen
Osang Paul Abijia
Orji Alexander Chinedu

Keywords: monetary policy, fiscal policy, coordination and economic growth

Abstract

Macroeconomic policy aims for steady, inflation-free growth. These measures include, for instance, monetary and fiscal policy. The Nigerian central bank utilizes monetary instruments, whilst the ministry of finance uses fiscal policy. Coordination of policies is required for the efficient application of the chosen policies and the accomplishment of the intended goal(s) or targets since the objectives and results of the policies adopted by the two institutions frequently clash. Using time series data from the World Bank Development Indicators, this study assessed the effects of monetary-fiscal policy coordination on economic development in Nigeria from 1980 to 2018. Multiple regression analysis was used in the study, and the results showed that, despite being ineffective, monetary-fiscal policy coordination is the most crucial tool for preserving economic stability in Nigeria. The study's findings imply that before starting to enact fiscal measures, the government should focus on monetary operations. Additionally, the agencies in charge of carrying out monetary and fiscal policies must demonstrate a stronger commitment to enhancing their coordination.

References

Abu Bakarr, T., Momodu, S. & Christian, R.A (2013). Fiscal and monetary policy coordination in the WAMZ: implication for members states, performance on the convergence criteria. A Paper Presented at the Fourth Annual Conference for Regional Integration in Africa Abidjan, Côte d’Ivoire July 4-6, 2013.
Arby, F. & Hanif, M.N. (2010). Monetary and Fiscal Coordination: Pakistan‟s Experience. SBP Research Bulletin, 6.
Chuku, C. A. (2010). Monetary and fiscal policy interactions in Nigeria: An application of a state-space model with Markov-switching. CBN Journal of Applied statistics, 1(1), 39-51.
Cleomar, G.S & Flavio, V. V. (2014). Monetary and Fiscal Policy in the World Economy: Coordination before and After the Financial Crisis. International Journal of Management Science, 2(1).
Folawewo, A. O., & Osinubi, T. S. (2006). Monetary Policy and Macroeconomic Instability in Nigeria: A Rational Expectation Approach. Journal of Social Sciences, 12(2), 93-100.
Laurens, B. & Piedra, L. (1998). Co-ordination of Monetary and Fiscal Policies. IMF Working Paper, WP/98/25, International Monetary Fund, Washington, D. C.
Lawal, A. I., Somoye, R. O., Babajide, A. A., & Nwanji, T. I. (2018). The effect of fiscal and monetary policies interaction on stock market performance: Evidence from Nigeria. Future Business Journal, 4(1), 16-33.
Muhammad, N. H. (2003). Monetary and Fiscal Policy Coordination. MPRA Paper No. 10307. Posted 6 September 2008 09:20 UTC Online at https://mpra.ub.uni-muenchen.de/10307/
Oboh, V. U. (2017). Monetary and fiscal policy coordination in Nigeria: a set theoretic approach. Academic Journal of Economic Studies, 3(1), 48-58.
Ojo, M. O. (2000). The Role of the Autonomy of the Central Bank of Nigeria (CBN) in Promoting Macroeconomic Stability. Economic & Financial Review, 38(1).
Wren-Lewis, S. (2010). Comparing the Delegation of monetary and fiscal policy. A paper presented at the Conference on Independent Fiscal Institutions, organised by the Hungarian Fiscal Council and Academy of Sciences in Budapest, March.