Thestudy examined factors surrounding measures of fiscal policy and its effect on economic growth in nigeria from 1981 2014. The study investigated effect of monetary policy on economic growth in nigeria. Nov 21, 2019 fiscal policy is the means by which a government adjusts its spending levels and tax rates to monitor and influence a nations economy. Papers are free to use material contained therein in other. Objectives of the study achieving price stability and ultimately economic growth is the major objective of monetary policy. Budget deficit is an expansionary policy measure adopted when the economic growth of a country assume negative value but has become a norm in nigeria, download the full project work with reference and abstract.
Oct, 2014 fiscal and monetary policy and its effect on the growth of nigeria economy a. Budget deficit is an expansionary policy measure adopted when the economic growth of a country assume negative value but has become a norm in nigeria. Department of accountancy akwa ibom state polytechnic, ikot osurua, ikot ekpene, nigeria email. The study investigates the impact of fiscal policy on economic growth in nigeria for the period 19852018. Introduction during the 1980s and 1990s, the vulnerability of emes to shocks was often exacerbated by high fiscal deficits, underdeveloped domestic bond markets, and largecurrency and maturity mismatches. Data were collected from the central bank of nigeria cbn statistical bulletins. Generally, this study will dwell on the overview of monetary policy situations in the nigerian economy. Pdf implications of fiscal policy measures on growth of. Ideally, the economy should grow between 2 % and 3. The research material available to the researcher is insufficient, thereby limiting the study. This ambiguity of the connection between fiscal policy and economic growth is due, in the main part, to the fact that fiscal policy is not a fundamental source of economic growth. Policy measures taken to increase gdp and economic growth are called expansionary.
Pdf fiscal policy and economic growth in south africa. Their major objective was to reestimate and reexamine the relative effectiveness of fiscal and monetary policies on economic growth in nigeria using annual data from 1970 to 2007. The impact of fiscal policy on economic growth the keep. Inflation 12 fiscal policy and the government budget economic outlook 15. In economics and political science, fiscal policy is the use of government revenue collection. The impact was marginally higher only n140 million or 14% contribution to gdp during deregulation, than in the regulation. The scope of the study covers fiscal policy and economic growth in nigeria from 19802012. In nigeria, 10 studied the contributions of public expenditure to economic growth in nigeria over the periods 1960 to 1992.
The impacts of public expenditures on economic growth have been revisited in this. Impact of fiscal policy on economic growth in nigeria 1986 2012, ols method of analysis. The problem faced in the country is the lack of assessment of what form of fiscal policy rules will perform better in reducing debt accumulation and promote investment and the necessary medium term budget deficit stability. D school of management sciences national open university of nigeria abstract the role of fiscal policies in the development of emerging economies has been a major source of concern in economic literature. The economic recovery and growth plan ergp, a medium term plan for 2017 2020, builds on the sip and has been developed for the purpose of restoring economic growth while leveraging the ingenuity. Fiscal policy is still widely recognized as a potent tool for enhancing growth, redistributing income and reducing poverty though the nigeria. This is contrary to persuasive monetary policy advice for inflation targeting. Fiscalmonetary policy and economic growth in nigeria hrmars. It is also evident from some studies that monetary rather than fiscal policy impacted a strong and significant influence on the growth of the nigerian economy ajisafe and folorunso, 2002. Fiscal policy, public debt and monetary policy in emerging. Fiscal policy is one of the most powerful instru ments that. Time series data were collected from the central bank of nigeria cbn, the international monetary fund imf and the world bank. The major objective is to identify the contribution of fiscal policy to nigeria economic. Being economy has long history of its economic problems irrespective of developing economy regardless of the nature of economic practices.
Growth and fiscal consequences of terrorism in nigeria. Impact of fiscal policy on the growth of agricultural sector in nigeria, 198120 okoh, abo sunday department of economics, federal university wukari, nigeria. Fiscal and monetary policy and its effect on the growth of. This paper is set out to investigate monetary and fiscal policy has tools for economic growth in nigeria and to also investigate which of this tools is most appropriate in the nigerian present state of economy using time series data spanning from 1981 to 2014. Fiscal policy is often used in conjunction with monetary policy. A comparative analysis emmanuel elakhe masters thesis economics other publish your bachelors or masters thesis, dissertation, term paper or essay. Fiscal policy, economic growth, government expenditure, taxation, fiscal balances. Measures taken to rein in an overheated economy usually when inflation is too high are called contractionary measu. The main objective of the study is to ascertain the effect of fiscal policy measures on growth of the nigerian economy. Jan 27, 2020 the second type of fiscal policy is contractionary fiscal policy, which is rarely used. The positive impact of these policy tools on economic performance will help the country achieve sustained growth and while reducing economic instability. Pdf fiscal and monetary policy instruments and economic.
Public disclosure authorized nigeria economic report. Furthermore, it is put together to help in accelerating the rate of investment. The findings from the study provided support for fiscal policyled growth. The impact of central bank of nigeria cashless policy in. Fiscal policy as an engine of economic growth in nigeria. The economic policy of governments covers the systems for setting levels of taxation, government budgets, the money supply and interest rates as well as the. It influences the economy using the money supply and interest rates. The nigerian economic report ner is a regular publication of the world bank. The paper examined the impact of monetary policy on economic growth in nigeria by developing a model that is able to investigate how monetary policy of the government has affected economic growth through the use of multivariable regression analysis. May 03, 2016 this study investigated the effect of fiscal policy on economic growth in nigeria. This paper examines the impact of fiscal policy on economic growth of the nigerian economy.
The objective of fiscal policy is to create healthy economic growth. Investigations show that nigeria was caught in the deficit trap since early 1980s when the world. Impact of budget deficit on economic growth of nigeria. Fiscal policy vs monetary policy difference and comparison.
Fiscal policy deals with government deliberate actions in spending money and levying taxes with a view to influencing macroeconomic variables in a desired direction which includes sustainable economic growth, high employment creation and low inflation. Fiscal policy has been identified as a means of generating growth. If a government wants to stimulate growth in the economy, it will increase. Oct 08, 2019 the pace of economic recovery remains slow, as depressed private consumption and investors waitandsee attitude kept growth in the first half of the year at 2 percent, a rate significantly below population growth. Additionally, it is designed to try to keep gdp growth at 2%3% and the unemployment rate near the natural unemployment rate of. United nations economic commission for africa fiscal policy for financing sustainable development in africa b ordering information to order copies of this report, please contact. The cyclical behavior of fiscal policy affects subsaharan african countries because many of them depend on commodity exports or have been gaining access to international capital markets in recent. Fiscal policy is the means by which a government adjusts its levels of spending in order to monitor and influence a nations economy. Analysis of the impact of fiscal policy on nigerias economic. Its goal is to slow economic growth and stamp out inflation. The paper suggest that for any meaningful progress towards fiscal prudence on the part of government to occur, some powerful prostability stakeholders strong enough to challenge government fiscal recklessness will need to emerge. Governments fiscal deficit expands above budget nigeria economic outlook top 10 themes for 2019 0. Isip 2017, growth and fiscal consequences of terrorism in nigeria. The effect of fiscal policies on the quality of growth independent.
Fiscal policy and economic growth in nigeria, 1970 2011 udokang, a. The fiscal policy variables considered in the study include government gross fixed. Results obtained showed that there is a difference in the effectiveness of fiscal policy in stimulating economic growth during and after regulation periods. This is contrary to persuasive monetary policy advice for inflation targeting pursued by central banks and the international monetary fund imf.
A comparative analysis emmanuel elakhe masters thesis economics other publish your bachelors or masters thesis, dissertation, term. Unlike previous investigations, our estimates are free from biases. Monetary policy refers to policies that affect interest rates and the money supply. In the medium and long term, fiscal policy also plays a significant role in the economy. Adefeso and mobolaji, 2010 while some other studies. Cyclical behavior of fiscal policy among subsaharan. The debate on the use of fiscal policy for economic stabilization and inducement of economic growth is an old one.
Now the major research question has been on the conditions that improve the effectiveness of fiscal policy intervention on economic growth and recent years have seen a revival of the debate about the role of fiscal policy in stimulating economic activity. Macroeconomic policies and economic growth in nigeria. An empirical trend analysis onyemaechi joseph onwe, ph. Pdf this article aims at determining the impact of various components of fiscal policy on the nigerian economy. The study developed and specified a multiple regression model to establish the relationship between the dependent variable and the independent variables. May 22, 2017 the scope of the study covers fiscal policy and economic growth in nigeria from 19802012. The effect of fiscal policy on economic growth in nigeria. Can fiscal policy curb the problem of economic growth and development in nigeria. The impact of fiscal policy on the nigeria economy economics. Fiscal policy and nigerian economic growth olawunmi. What nigeria needs is a fiscal policy rule, which would commit the government to a certain level of conduct in fiscal and budgetary management.
Taxation, major source of government revenue as well government expenditure are important channels of transmission between fiscal policy and growth. Furthermore, it is put together to help in accelerating the rate of investment and capital formation. It is the sister strategy to monetary policy through which a. In the cause of the study, there are some factors which limited the scope of the study. D school of management sciences national open university of nigeria abstract the role of fiscal policies in the development of emerging economies has been a major source of concern in economic. For a discussion of the growth impact of volatility on the nigerian economy. Fiscal policy in nigeria international monetary fund. The various tools of fiscal policy such as budget, taxation, public expenditure, public works and public debt can go a long way for.
This article aims at determining the impact of various components of fiscal policy on the nigerian economy. Impact of monetary policy on economic growth in nigeria. Theory and evidence 293 policy options 301 annex 9a. The dummy variable shows that there is a significant difference between civilian and military regimes with respect to fiscal decentralization and economic welfare in nigeria. Nigeria, fiscal policies, economic growth, debt to gdp ratio. Fiscal policy is a governments decisions regarding spending and taxing. How fiscal policy and monetary policy affect the economy. Ii oil revenues and fiscal sustainability in nigeria. Appah, 2010 in his study, the relationship between fiscal policy and economic growth in nigeria. The study used data from 1970 to 2011 and employed. Fiscal and monetary policy and economic growth in nigeria. Headline inflation has fallen, reaching its lowest level since january 2016, helped by lower food price inflation. This paper assesses how fiscal and monetary policies influence economic growth and development in nigeria. Economic fluctuations and growth one view of government fiscal policy is that it stifles dynamic economic growth through the distortionary effects of taxation and inefficient government spending.
In fact, governments often prefer monetary policy for stabilising the economy. We simply used descriptive statistics to show contribution of government fiscal policy to economic growth, and to ascertain and explain growth rates, and an ordinary least square ols in a multiple form to ascertain the relationship between economic growth. For example, there is no specific or identifiable economic growth or development in nigeria and this questions the possibility of the policy ever bringing the countrys economy to its optimum and desired level. We simply used descriptive statistics to show contribution of government fiscal policy to economic growth, and to ascertain and explain growth rates, and an ordinary least square ols in a multiple form to ascertain the relationship between economic growth and government expenditure. The positive impact of these policy tools on economic. Nigeria economic outlook top 10 themes for 2019 disclaimer this document has been prepared for general guidance on matters of interest only, and does not constitute professional advice. The pace of economic recovery remains slow, as depressed private consumption and investors waitandsee attitude kept growth in the first half of the year at 2 percent, a rate significantly below population growth. This paper has examined empirically the contribution of fiscal policy in the achievement of sustainable economic growth in nigeria.
The application of the ecm and granger causality test reveals that total government expenditure tge has a positive and a significant. Fiscalmonetary policy and economic growth in nigeria. It equally helps to maintain full employment condition. Pdf monetary and fiscal policy, tools for economic growth. The paper suggest that for any meaningful progress towards fiscal prudence on the part of government to occur, some powerful prostability stakeholders strong enough to challenge government fiscal. The general objective of the study is to look at the impact of fiscal and monetary policy on the economic growth of nigeria. Role of fiscal policy in economic development of under developed countries. The goal of the nigerian fiscal policy is best achieved via stable instruments, like government expenditure and interest rate. Get free research paper on an econometric analysis of the impact of fiscal policy on nigeria economy our project topics and materials are suitable for students in nigeria with case studies in pdf, doc. Analysis of the impact of fiscal policy on nigerias economic growth 19802012 introduction.
In chapter three, which is the structural composition, the macroeconomic policy as it affect nigeria. Fiscal policy, public debt and monetary policy in emes. The impact of central bank of nigeria cashless policy in nigeria economy 1martin c. Falade and folorunso 2015 examined the relative effectiveness of fiscal and monetary policy instruments on economic growth sustainability in nigeria in order to determine the appropriate mix of. Both fiscal and monetary policy can be either expansionary or contractionary. Also, both monetary and fiscal policies should be complementary.
Emphasis on various components of public expenditure. Omojimite and iboma 2012 on their paper focused on fiscal deficit and the productivity of the nigeria. The impact of fiscal and monetary policy on nigerian. The longterm impact of inflation can damage the standard of living as much as a recession. Meaning that the emphasis on fiscal action of the government has led to greater distortion in the nigerian economy. A disaggregated approach ali danjumah umaru and ahmad usman gatawa department of economics,sokoto state university, sokoto email. The main objective is to analysis how various components of fiscal policy have contributed to the growth rate of the nigerian economy. Thus, monetary policy plays a stabilizing role in influencing economic growth. Fiscal policy and economic growth in nigeria, 1970 2011. Fiscal policy rules, illustrative projections, in percent of gdp 34. They also position the federal government to formulate and implement economic policy. An econometric investigation abubakar risk of overheating.
Economic fluctuations and growth one view of government fiscal policy is that it stifles dynamic economic growth. We simply used descriptive statistics to show contribution of government fiscal policy to economic growth, and to ascertain and explain growth rates, and an ordinary least square ols in a multiple form to ascertain the relationship between economic growth and government expenditure components after ensuring data stationarity. Fiscal policy is designed to help in managing the rate of growth of the nigerian economy towards ensuring its full stability. The study was undertaken to ascertain impact of fiscal policies in nigeria economy. Using the solow growth model estimated with the use of ordinary least square method, it was found that fiscal policy has not been effective in the area of promoting sustainable economic growth in nigeria. The impact of budget deficit on economic growth of nigeria pdf. Fiscal and monetary policy instruments and economic growth.
Adefeso and mobalaji 2010 wrote on the fiscal monetary policy and economic growth in nigeria. The time series data is the market controlled period covering 1986 to 2016. We are, however, of the opinion that a wellcoordinated macroeconomic policy is needed to achieve economic growth in nigeria. The central bank tries to maintain price stability through controlling the level of money supply. The purpose of the paper is to examine the effect of fiscal policy variables on economic growth in south africa. Results of regression analysis 308 notes 311 references and other resources 315 boxes 1. Key issue in this debate relates to the efficacy of public expenditure on. This study involves comparative analysis of the impact of fiscal policy on economic growth in nigeria during regulation and deregulation periods. The tools of contractionary fiscal policy are used in reverse. 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. 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. Economic outlook 3 contents theme 1 oil prices still lower for longer theme 2 economy growth gets a boost from high oil prices theme 3 inflation declines sharply, driven mainly by base effects theme 4 monetary policy rate set to fall, and then rise theme 5 governments fiscal. Fiscal policy is the general name for the federal governments taxation and expenditure decisions and activities, particularly as they affect the economy.