IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v8y2024i9p152-167.html
   My bibliography  Save this article

Examining the Effects of Fiscal-Monetary Policy Interactions on Unemployment Rates in Nigeria (1985-2023)

Author

Listed:
  • I. O. Olurinola

    (Department of Economics, Anchor University, Lagos State, Nigeria)

  • I.E. Egbe

    (Department of Economics, Anchor University, Lagos State, Nigeria)

Abstract

Despite the abundance of natural resources in Nigeria, the problem of unemployment is still intractable; and thus, has made Nigeria to be ranked among the nations with the highest rate of unemployment in sub-Saharan Africa. This study therefore seeks to assess how effective a mix of monetary and fiscal policy is at addressing the scourge of unemployment in Nigeria over time. The IS-LM framework formed the theoretical basis of this study. This study used secondary data collected from various sources for a period of 39 years, from 1985-2023. For the analysis, the Auto-regressive Distributed Lag (ARDL) method was used alongside the Bounds test approach and other post estimation tests. The study estimated both the short-run and long-run effects of the interactive economic variables on unemployment in Nigeria. The study found that monetary policy instruments alone have significant and positive relationships on employment, while the fiscal policy variables were not significant in both short-run and long-run. However, the study also revealed that in Nigeria, the interaction of some of these two policies are significant and depict a negative relationship with the rate of unemployment, while others were not significant which could be as a result of a poor implementation structure in the Nigerian context. The study recommends that before the economy implements an effective policy mix, there should be a proper review to these policies to ensure that one is not more dominant than the other, as this study revealed. Interest rates should be such that would encourage investment, productivity and job creation. Also, the government should ensure that the effects of their expenditure is seen with respect to employment generation and provision of amenities for economic progress.

Suggested Citation

  • I. O. Olurinola & I.E. Egbe, 2024. "Examining the Effects of Fiscal-Monetary Policy Interactions on Unemployment Rates in Nigeria (1985-2023)," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(9), pages 152-167, September.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:9:p:152-167
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-8-issue-9/152-167.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/journals/ijriss/articles/examining-the-effects-of-fiscal-monetary-policy-interactions-on-unemployment-rates-in-nigeria-1985-2023/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barnabas Amu & Evans S. Osabuohien & Philip O. Alege & Jeremiah O. Ejemeyovwi, 2021. "Impact of Real Shocks on Business Cycles in selected Sub-Saharan African Countries," Cogent Business & Management, Taylor & Francis Journals, vol. 8(1), pages 1875548-187, January.
    2. Dubravko Mihaljek, 2021. "Interactions between fiscal and monetary policies: a brief history of a long relationship," Public Sector Economics, Institute of Public Finance, vol. 45(4), pages 419-432.
    3. Mr. Thomas Baunsgaard, 2003. "Fiscal Policy in Nigeria: Any Role for Rules?," IMF Working Papers 2003/155, International Monetary Fund.
    4. Eleonora Herrera-Medina & Antoni Riera Font, 2023. "A Game Theoretic Approach to Collaboration in Policy Coordination," Economies, MDPI, vol. 11(10), pages 1-9, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Oseni, Isiaq Olasunkanmi & Oyelade, Aduralere O., 2023. "The Effects of Monetary Policies on Economic Growth in Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 11(3), June.
    2. Ilkin Sabiroglu & Samad Bashirli & Faiq Qasimli, 2011. "Creating a Favourable Deployment Mechanism of Oil and Gas Revenues with Regard to Volatile Oil Prices: The Case of Azerbaijan," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 18(1), pages 179-199, September.
    3. Mauricio Villafuerte & Pablo López-Murphy & Rolando Ossowski, 2011. "Riding the Roller Coaster: Fiscal Policies of Nonrenewable Resources Exporters in Latin America and the Caribbean ," Working Papers Central Bank of Chile 609, Central Bank of Chile.
    4. Ebi, Bassey Okon & Aladejare, Samson Adeniyi, 2022. "Oil Price Transmission, Deficit Financing and Capital Formation," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 123-133.
    5. Aliyu Alhaji Jibrilla, 2016. "Fiscal sustainability in the presence of structural breaks: Does overconfidence on resource exports hurt government’s ability to finance debt? Evidence from Nigeria," Cogent Economics & Finance, Taylor & Francis Journals, vol. 4(1), pages 1170317-117, December.
    6. Simon OGAGA, 2020. "Time Frame Of Budget Passage: Evidence From Nigerian Data," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 5(4), pages 122-131.
    7. Sweder van Wijnbergen & Nina Budina, 2011. "Fiscal Sustainability, Volatility and Oil Wealth: A Stochastic Analysis of Fiscal Spending Rules," Tinbergen Institute Discussion Papers 11-068/2, Tinbergen Institute, revised 16 May 2011.
    8. Kindy R. Sjahrir, 2018. "Fiscal Constraints in the Financial System Stability Framework for Indonesian Data," Working Papers in Economics and Development Studies (WoPEDS) 201803, Department of Economics, Padjadjaran University, revised Dec 2018.
    9. Abubakar, Attahir Babaji & Muhammad, Mansur & Mensah, Samuel, 2023. "Response of fiscal efforts to oil price dynamics," Resources Policy, Elsevier, vol. 81(C).
    10. Pablo Lopez Murphy & Mr. Mauricio Villafuerte & Mr. Rolando Ossowski, 2010. "Riding the Roller Coaster: Fiscal Policies of Nonrenewable Resource Exporters in Latin America and the Caribbean," IMF Working Papers 2010/251, International Monetary Fund.
    11. Anyalechi Kenneth Chikezie & Onwumere Uchechukwu Joe & Boloupremo Tarila, 2017. "Fiscal Policy and the Nigerian Economy: An Econometric Review," International Journal of Business and Management, Canadian Center of Science and Education, vol. 12(4), pages 186-186, March.
    12. Mauricio Villafuerte & Pablo López-Murphy & Rolando Ossowski, 2013. "Riding the Roller Coaster: Fiscal Policies of Nonrenewable Resource Exporters in Latin America and the Caribbean," Central Banking, Analysis, and Economic Policies Book Series, in: Luis Felipe Céspedes & Jordi Galí (ed.),Fiscal Policy and Macroeconomic Performance, edition 1, volume 17, chapter 5, pages 117-173, Central Bank of Chile.
    13. Mr. Joseph Ntamatungiro, 2004. "Fiscal Sustainability in Heavily Indebted Countries Dependenton Nonrenewable Resources: The Case of Gabon," IMF Working Papers 2004/030, International Monetary Fund.
    14. Budina, Nina & van Wijnbergen, Sweder, 2007. "Quantitative approaches to fiscal sustainability analysis : a new World Bank tool applied to Turkey," Policy Research Working Paper Series 4169, The World Bank.
    15. Mr. Jan-Peter Olters & Mr. Daniel Leigh, 2006. "Natural-Resource Depletion, Habit Formation, and Sustainable Fiscal Policy: Lessons from Gabon," IMF Working Papers 2006/193, International Monetary Fund.
    16. Odusola, Ayodele, 2006. "Tax Policy Reforms in Nigeria," UNDP Africa Economists Working Papers 307339, United Nations Development Programme (UNDP).
    17. Dubravko Mihaljek, 2023. "Inflation and public finances: an overview," Public Sector Economics, Institute of Public Finance, vol. 47(4), pages 413-430.
    18. Mr. Ian Lienert, 2010. "Should Advanced Countries Adopt a Fiscal Responsibility Law?," IMF Working Papers 2010/254, International Monetary Fund.
    19. Ian Lienert, 2013. "Fiscal Responsibility Laws: Are They Needed?," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 1-32.
    20. Damian Ondo Mañe, 2005. "Emergence of the Gulf of Guinea in the Global Economy: Prospects and Challenges," IMF Working Papers 2005/235, International Monetary Fund.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:8:y:2024:i:9:p:152-167. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.