Comparative Analysis of the Effect of Monetary Policy and Fiscal Policy on Nigeria’s Economic Growth (1985-2022)

Monetary policy and fiscal policy are macroeconomic policies that government used to regulate or modify the economic affairs of an economy and achieving the macroeconomic objectives. The vital importance of this research work is to examine the comparative analysis of the effect of monetary policy and fiscal policy on economic growth in Nigeria between 1985 and 2022. In this study, Variables such as money supply (MS), interest rate (INTR), exchange rate (EXR) was used to proxy monetary policy while government revenue(GTR), government expenditure(GTE) was employed to proxy fiscal policy and gross domestic product(GDP) was used as the dependent variable which proxy economic growth. The data used in this research work is classified as secondary data and it was obtained in the Central Bank of Nigeria (CBN) statistical bulletins. The unit root test confirmed that some of the variables were stationary at level while some are stationary at first level difference. The Autoregressive Distributed Lag (ARDL) bound co-integration test confirmed that there is a long run relationship between the variables. The short run analysis shows that government revenue, interest rate and money supply does not significantly impact on gross domestic product while government expenditure has a significant positive impact on GDP while exchange rate has a significant negative impact on GDP. The long run analysis shows that government revenue, exchange rate and interest rate does not have significant impact on gross domestic product while government expenditure and money supply has a significant positive impact on GDP. The study recommends that government should strengthen monetary policy framework because based on the findings of the study, monetary policy variables has greater impact on GDP than fiscal policy. The study also recommends the autonomy of monetary authorities and to promote effective policy mix. The study recommends the collaboration of the policies to drive economic growth and for the creation of new policies.