Evaluating the Relative Impact of Monetary and Fiscal Policy in
Nigeria using the St. Louis Equation Cover Image

Evaluating the Relative Impact of Monetary and Fiscal Policy in Nigeria using the St. Louis Equation
Evaluating the Relative Impact of Monetary and Fiscal Policy in Nigeria using the St. Louis Equation

Author(s): Michael Adebayo Ajayi, Olufemi Adewale Aluko
Subject(s): Economy
Published by: Editura Universitară Danubius
Keywords: Monetary policy; Fiscal policy; St. Louis equation; Nigeria

Summary/Abstract: The controversy existing on the efficacy of monetary and fiscal policy to influence the economy is unending. This study evaluates the relative impact of monetary and fiscal policy in Nigeria from 1986 to 2014 using a modified St. Louis equation. Employing the Ordinary Least Squares estimation method, this study reveals that growth in money supply and export have a positive and significant effect on growth in output of the economy while growth in government expenditure has a negative and insignificant effect. This study provides evidence that monetary policy has a greater growth-stimulating effect on the economy than fiscal policy. It recommends that monetary policy rather than fiscal policy should be relied upon by the Nigerian government as an economic stabilisation tool.

  • Issue Year: 13/2017
  • Issue No: 1
  • Page Range: 40-50
  • Page Count: 11
  • Language: English
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