The study examined the impact of government fiscal and monetary policies on economic growth within the period of 33 years (1981-2014). Time series data were derived from the Central Bank of Nigeria statistical bulletin, while the method of analysis was the Johansen Cointegration test, vector error correction method and the Wald test of coefficient. The result of the findings showed that there is a significant relationship between explanatory variables (government expenditure, interest rate and money supply) taken jointly and the dependent variable (real gross domestic product) in the long run. The coefficient of error correction term is -0.02 showing a 2% yearly adjustment towards the long run equilibrium. This proves that there is a relationship between the dependent variable- real gross domestic product and the independent variables - government expenditure, money supply and interest rate in the long run. The estimated coefficients of the short run model indicate no significant relationship between the dependent variable real gross domestic product and independent variables government expenditure, money supply and interest rates taken together but individually a short run relationship exist between the fiscal variable (government expenditure) and real GDP and between the monetary variable (money supply and interest rate) and real GDP. The policy implication of these findings is that more strategies needs to be put in place in order to ensure that monetary and fiscal policies taken jointly positively impacts on economic growth the in the shortrun.
Table of Contents
- 1.1 BACKGROUND TO THE STUDY
- 1.2 STATEMENT OF RESEARCH HYPOTHESIS
- 2.1 The Concept of Policy
- 2.1.1 Conceptual Framework
- 2.1.2 Economic Growth
- 2.1.3 Fiscal Policy
- 2.1.4 Monetary Policy
- 2.2 THEORETICAL REVIEW
- 2.2.1 Fiscal Policy and Economic Growth
- 2.2.2 Monetary Policy and Economic Growth
- 2.3 EMPIRICAL REVIEW
- 3.1 RESEARCH METHOD
- 3.1.1 Model Specification
- 4.1 RESULTS AND FINDINGS
- 4.2 DATA ANALYSIS
- 5.0 Conclusions and Recommendations
- References
Objectives and Key Themes
This study aims to analyze the impact of fiscal and monetary policies on economic growth in Nigeria from 1981 to 2014. It utilizes time-series data and econometric methods to determine the relationship between government expenditure, interest rates, money supply, and real GDP.
- The impact of fiscal policy on economic growth in Nigeria.
- The impact of monetary policy on economic growth in Nigeria.
- The relationship between fiscal and monetary policies and economic growth.
- Analysis of short-run versus long-run effects of policies on economic growth.
- Policy recommendations for improving the effectiveness of fiscal and monetary policies in promoting economic growth.
Chapter Summaries
1.1 BACKGROUND TO THE STUDY: This introductory section establishes the context of the research by highlighting the importance of economic growth as a macroeconomic objective and the role of fiscal and monetary policies in influencing it. It introduces the Keynesian and neoclassical perspectives on government intervention and explains how efficient policies can boost economic growth, while inefficient ones can hinder it. The section underscores the significance of understanding how government revenue and expenditure impact economic output, differentiating between productive and unproductive spending. It concludes by briefly mentioning Nigeria's post-independence economic policies and the shift from state-controlled economies to the Structural Adjustment Programme (SAP).
2.1 The Concept of Policy: This chapter provides a foundational understanding of the key concepts relevant to the study. It defines policy itself, explores the concept of economic growth, and delves into detailed explanations of fiscal policy (government revenue and expenditure's influence on the economy) and monetary policy (the central bank's control over monetary aggregates like money supply and interest rates). This lays the groundwork for the subsequent chapters' analysis of how these policies interact with and affect Nigeria's economic growth.
2.2 THEORETICAL REVIEW: This chapter presents existing theories related to the impact of fiscal and monetary policies on economic growth. It examines the theoretical underpinnings of how fiscal policy instruments (government spending and taxation) and monetary policy tools (interest rates, money supply) influence economic activity. This section likely draws on established macroeconomic models and theories to provide a framework for understanding the mechanisms through which policies impact growth.
2.3 EMPIRICAL REVIEW: This chapter reviews existing empirical studies that have examined the relationship between fiscal and monetary policies and economic growth, particularly in contexts similar to Nigeria's. This section summarizes previous research findings, identifying consistent patterns or disagreements among different studies. This forms a basis for comparison with the current research's findings.
3.1 RESEARCH METHOD: This chapter details the methodological approach of the study, outlining the specific econometric techniques used to analyze the data. This involves a clear description of the model specifications, data sources, and statistical methods (like Johansen cointegration test, vector error correction model, and Wald test) employed to test the research hypotheses. The rigorous description of the methodology ensures the study's replicability and allows for critical evaluation of its findings.
4.1 RESULTS AND FINDINGS: This chapter presents the main results of the empirical analysis. It details the findings of the econometric tests, reporting the statistical significance of the relationships identified between the variables. It likely includes discussion of both the long-run and short-run relationships between fiscal and monetary policy variables and economic growth.
4.2 DATA ANALYSIS: This chapter provides a detailed explanation of the data analysis process, offering a deeper look into the statistical techniques and results presented in Chapter 4.1. This section may include tables and figures illustrating the data and its statistical treatment, supporting the interpretations of the results and strengthening the study's credibility.
Keywords
Fiscal policy, monetary policy, economic growth, Nigeria, government expenditure, interest rates, money supply, real GDP, econometrics, Johansen cointegration, vector error correction model, time series analysis.
Frequently Asked Questions: Analysis of Fiscal and Monetary Policies on Economic Growth in Nigeria
What is the main focus of this study?
This study analyzes the impact of fiscal and monetary policies on economic growth in Nigeria from 1981 to 2014. It investigates the relationship between government expenditure, interest rates, money supply, and real GDP using time-series data and econometric methods.
What are the key objectives and themes explored?
The study aims to determine: the impact of fiscal policy on Nigerian economic growth; the impact of monetary policy on Nigerian economic growth; the relationship between fiscal and monetary policies and economic growth; the short-run versus long-run effects of these policies; and to provide policy recommendations for improving their effectiveness in promoting growth.
What is included in the Table of Contents?
The table of contents covers a comprehensive overview, starting with background information and the research hypothesis, then delves into the concept of policy (including fiscal and monetary policy), theoretical and empirical reviews, research methods, results and findings, data analysis, and concludes with conclusions and recommendations, followed by a list of references.
How does the study approach the concept of policy?
The study defines and explains the concepts of economic growth, fiscal policy (government revenue and expenditure), and monetary policy (central bank's control over money supply and interest rates). It lays the groundwork for analyzing their interaction and impact on Nigeria's economic growth.
What theoretical frameworks are used?
The theoretical review examines existing theories on the impact of fiscal and monetary policies on economic growth, drawing on established macroeconomic models and theories to explain how these policies influence economic activity.
What empirical evidence is considered?
The empirical review summarizes existing studies examining the relationship between fiscal and monetary policies and economic growth, particularly in contexts similar to Nigeria's. This provides a basis for comparing the study's findings with previous research.
What research methodology is employed?
The study uses econometric techniques to analyze time-series data. The methodology includes specific model specifications, data sources, and statistical methods such as the Johansen cointegration test, vector error correction model, and Wald test. This ensures the study's replicability and allows for critical evaluation.
What are the key findings of the study?
The results and findings chapter presents the empirical analysis results, detailing the statistical significance of relationships between variables. It discusses both long-run and short-run relationships between fiscal and monetary policy variables and economic growth.
How is the data analysis presented?
The data analysis chapter provides a detailed explanation of the statistical techniques and results, including tables and figures illustrating the data and its treatment. This enhances the study's credibility and supports the interpretation of results.
What are the key terms used in the study?
Key terms include: fiscal policy, monetary policy, economic growth, Nigeria, government expenditure, interest rates, money supply, real GDP, econometrics, Johansen cointegration, vector error correction model, and time series analysis.
What are the chapter summaries?
Chapter summaries provide concise overviews of each chapter's content, outlining the key topics and findings of each section of the study. These summaries offer a quick way to grasp the core arguments and conclusions of each chapter.
- Quote paper
- Emmanuel Elakhe (Author), 2016, Fiscal and Monetary Policy and Economic Growth in Nigeria. A Comparative Analysis, Munich, GRIN Verlag, https://www.grin.com/document/375716
