The Impact of Monetary and Fiscal Policies On the Performance of the Industrial Sector in Nigeria: A Bounds Test Approach (Published)
This study explicitly digs into the separated impact of fiscal and monetary policies as government stabilization policies on the Nigerian industrial sector performance as a real sector, from 1986-2021, using the ARDL Bounds Testing Approach. The data were filtered with use of Augmented Dickey Fuller unit root test while Johansen cointegration test was used to justify the long-run relationship among all included variables. Annual data were gathered from the Central Bank of Nigeria (CBN) Statistical Bulletin and World Bank Indicators (various issues). It was discovered that government stabilization policies are potent determinants on the industrial sector output in Nigeria both in the short-run and long-run. An appropriate monetary and fiscal policies mix and adjustments to match the dynamic nature of the economy would not only develop and sustain the Nigerian industrial sector but also enhance the living standard of the people.
Citation: Emmanuel Oghenekome Akpoghelie (2022) The Impact of Monetary and Fiscal Policies On the Performance of the Industrial Sector in Nigeria: A Bounds Test Approach, Global Journal of Arts, Humanities and Social Sciences, Vol.10, No.4, pp.1-22
Keywords: COVID-19, Fiscal Policy, Monetary Policy, bounds test approach, industrial output, stabilization policy
Understanding the Macroeconomic Implications of the Dynamics of Monetary Policy Measures: Lesson from the Nigerian Economy (Published)
In this paper, econometrics evidence linking monetary policy measures to key macroeconomic goals with emphasis on price stability and unemployment is provided using error correction mechanism (ECM), unit root and cointegration tests in addition to basic descriptive statistics. The unit root test results showed that the variables are mixed integrated. The outcomes of the cointegration test reveal that the variables in each of the models have long run relationship and as such can be represented as an ECM. The estimated parsimonious ECM show that the current values of cash reserve ratio and exchange rate as well as lagged values of credit to the private sector are positively and significantly related to inflation. On the contrary, the short run effect of contemporaneous and lagged values of interest rate on inflation is negative. Additionally, money supply exerts significant negative effect on inflation during the study period. The result of the estimated unemployment model reveals that the current and first lag of interest rate has significant positive effect on unemployment. The result also shows that the current and third lag of money supply has significant positive impact on unemployment rate. The short run impact of credit to the private sector and third lag of exchange rate on unemployment is negative. The error correction coefficients in each of the models are associated with the expected negative sign and are statistically significant at 5 percent level. Owing to the findings, the paper recommends that the Central Bank of Nigeria should adequately monitor the implementation of monetary policy in order to prevent or reduce bottlenecks that may impair its effectiveness in achieving goals of price stability and employment generation.
Keywords: Cointegration, ECM and Nigeria, Monetary Policy, Price Stability, Unemployment