Faculty: Management Sciences
Department: Banking And Finance
Okoye, U. G.
Nwakoby, C. I. N.
The study examined the effect of fiscal and monetary policy instruments on economic growth of Nigeria. The inconsistencies in results of previous studies regarding the effect of fiscal and monetary policy instruments on economic growth necessitated this study. Specifically, this study determined the effect of monetary policy rate, liquidity ratio, exchange rate, recurrent expenditure, capital expenditure and fiscal deficit on economic growth of Nigeria. An ex-post facto research design was the research design this study adopted. The study Auto-regressive Distributive Lag (ARDL) Model using secondary data from Central Bank of Nigeria and National Bureau of Statistics from 1985 to 2016. The result of the analysis revealed that monetary policy and liquidity ratio have no significant effect on economic growth, while exchange rate has significant effect on economic growth of Nigeria. The finding also depicted that capital expenditure and fiscal deficit have significant effect on the Nigeria’s economic growth, whereas recurrent expenditure has no significant effect on economic growth in Nigeria. Government should allocate and effectively monitor funds sourced as a result of fiscal deficit to the provision of critical economic infrastructures such as electricity, access road, health, communication among others to reap the benefit associated with fiscal deficit. The Central Bank of Nigeria should make policies that will keep the exchange rate at a stable rate since exchange rate volatility is affecting the growth of Nigerian economy.