Template-Type: ReDIF-Article 1.0
Author-Name: Augustine Jacob
Author-Name-First: Augustine
Author-Name-Last: Jacob
Author-Email: drjacob.ao@gmail.com
Author-Workplace-Name: Department of Business Administration, School of Management Science, Heritage Polytechnic, Ikot Udota, Nigeria.
Author-Name: Emmanuel Onwioduokit
Author-Name-First: Emmanuel
Author-Name-Last: Onwioduokit
Author-Email: emmanuel.ating@uniuyo.edu.ng
Author-Workplace-Name: Department of Economics, University of Uyo, Uyo, Nigeria
Author-Name: Okon Umoh
Author-Name-First: Okon
Author-Name-Last: Umoh
Author-Email: okon.umoh@uniuyo.edu.ng
Author-Workplace-Name: Department of Economics, University of Uyo, Uyo, Nigeria
Title: An Evaluation of the Effectiveness of Monetary and Fiscal Policies on Economic Development in Nigeria
Abstract: Nigeria's resource-rich economy remains hampered by sluggish growth, volatile inflation and high unemployment. Oil dependence and weak institutions exacerbate macroeconomic imbalances. This review assesses the effectiveness of Nigeria's monetary and fiscal policies in contributing to economic development and examines their interplay. Surveyed theoretical frameworks (classical, Keynesian and New Keynesian) and synthesised empirical findings from studies employing ARDL, ECM, SVAR and DSGE methods published between 1980 and 2025. The study evaluated the policy impacts on GDP growth, inflation, and employment. Quantitative evidence suggests that monetary policy has significant short-run effects: an ARDL study finds that interest rate cuts substantially increase output, whereas the broad money supply has a negative long-run impact. Fiscal policy accounts for a sizable portion of growth variation; a 1994–2023 regression yields an adjusted R-squared (R²) of 0.59, indicating that government spending and revenue are positively correlated with GDP, while deficits and double-digit debt ratios are negatively correlated. Nigeria's fiscal revenue fell to 5.9% of GDP in 2016, one of the lowest shares globally, while the median tax revenue was only 4.5%. The debt-to-GDP ratio nearly doubled from 13.7% in 2014 to 29.3% in 2021. A simulation of policy combinations suggests that tightening fiscal policy while loosening monetary policy can raise output by 1.6–1.7 %. The effectiveness of both policies is contingent upon price rigidity, the depth of the financial sector, and governance. Low revenues and rising debt constrain fiscal space; unstable money demand and multiple exchange rates hinder monetary transmission.
Classification-JEL: JEL
Keywords: Monetary Policy; Fiscal Policy; Economic Development; Policy Coordination
Journal: International Journal of Resistive Economics
Pages: 80-110
Volume: 14
Issue: 1
Year: 2026
Month: January
DOI: 10.22034/oajre.2026.557619.1162
File-URL: https://www.oajre.ir/article_240607_8ef8ad71a6b41a0fc237d1b3bc717e48.pdf
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Handle: RePEc:trd:journl:240607