Abstract
Monetary policy and Fiscal policy are Macroeconomic instruments used in regulating the financial operations in an economy towards the economic growth. Vast researches have been undertaken and empirical evidences proved that, both policies have to be efficiently and effectively maintained for a sustainable economic growth. The objective of this study is to establish the relationship between the monetary and fiscal policy with economic growth in Nigeria, and determine the suitable percentage mix of the policies. The study uses Money supply, Tax revenue generated and GDP as element of Monetary, Fiscal and Economic Growth respectively, for the period of 10years, from 2006 -2015. Pearson correlation technique was used to establish the relationship between the dependent and independent variables. The analyses revealed that; Money supply made the most significant contribution to prediction of GDP in Nigeria than Tax revenue generated. The results of these findings are however translated to proportion of percentage mix as 87% and 13% for monetary and fiscal policy respectively. Therefore if government increases expenditures, it should also adopt the necessary measures that will necessitate income generation, as well provides governing policies to lower the expense of the income on consumable goods. Key words : monetary policy, fiscal policy, economic growth DOI : 10.7176/JESD/10-24-16 Publication date: December 31 st 2019
Highlights
This study involves comparative analysis of the impact of monetary policy and fiscal policy on economic growth in Nigeria, during regulation and deregulation periods
This lead was translated to the objective of the research which is to determine the relationship between fiscal policy and economic growth in Nigeria as presented in Gross Domestic Product (GDP) and establish the appropriate percentage mix of both policies
The P value which is 0.000 is less than 0.05 level of significance used in social sciences to test the hypothesis. This means that the null hypothesis which states that there is no significant relationship between money supply and the level of output as presented in GDP shall be rejected, and we accept the alternative hypothesis which states that: There is significant relationship between money supply and economic growth
Summary
This study involves comparative analysis of the impact of monetary policy and fiscal policy on economic growth in Nigeria, during regulation and deregulation periods. The problem of this study is whether there is a relationship between monetary policy and fiscal policy with economic growth in Nigeria and if there is what the most suitable percentage mix of the policies should be. This study, examined the impact of monetary policy and fiscal policy on economic growth in Nigeria. The aim of the study is to examine the relationship between Monetary policy and Fiscal policy; (inform of money supply / Tax revenue generated), and Economic Growth (as presented in GDP) in Nigeria. If r = 1, the observations fall on a straight line with positive slope. If r = -1, the observations fall on a straight line with negative slope.
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