The Impact of Monetary and Fiscal Policies on The Real Gross Domestic Product of Nigeria 1970-2003
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Abstract
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This paper builds and estimates a model of national income (proxied by the gross
domestic product, GDP), with a view to testing the impact of monetary and fiscal
policies on aggregate demand and economic growth. The estimation technique used
is the Error Corre.:tion Model (ECM). This approach points to the existence of a
long-run equilibrium in the growth of real GDP as ajimction ofmoney supply, export
and other regressors in the period I 970- 2003. The empirical results tend to suggest
non-neutrality of monetary policy while fiscal policy appears to corroborate thepolicy ineffectiveness proposition (PIP). From the findings it is apparent that
regulatory authorities need a judicious combination ofmonetary andfiscal policies
in order to ensure long-run economic growth.
Keywords
HB Economic Theory