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Monetary and Fiscal Policies’ Effects on Commodity Price in Nigeria

Author

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  • Christian Gbarawae NWIKINA

    (Department of Economics, Faculty of Social Sciences, Rivers State University, Nkpolu-Oroworukwo, Port Harcourt, Rivers State, Nigeria.)

  • Victor AKIDI

    (Department of Economics, Faculty of Social Sciences, Rivers State University, Nkpolu-Oroworukwo, Port Harcourt, Rivers State, Nigeria.)

  • Lasisi ABDULLAHI

    (Department of Economics, Faculty of Social Sciences, Rivers State University, Nkpolu-Oroworukwo, Port Harcourt, Rivers State, Nigeria.)

Abstract

Utilizing the data period 1990 to 2022, this empirical study is conducted to ascertain how monetary and fiscal policies in Nigeria impact on commodity price. The policy synthesis variable was defined as the product of broad money supply growth and government expenditure growth, while the commodity price index serves as the regressor. Monetary policy variables include the real interest rate and broad money supply growth, while fiscal policy variables include the federal government revenue growth and expenditure growth. The researchers empirically analysed yearly data from the Central Bank of Nigeria (CBN) statistical bulletin and the National Bureau of Statistics (NBS) reports employing the Autoregressive Distributive Lag (ARDL) approach. The results suggested that the policy mix variable, federal government expenditure growth, and broad money stock growth had substantial and negative effects on the commodity price index for the short-run and long-term. Real interest rate had substantial positive effect on the regressor in both the short-run and long-term. Federal government revenue growth had an insignificant negative influence in both the short-run and long-term. The study concluded that the policy mixes variable and the employed monetary and fiscal policies indicators are significant measures for commodity price moderation in Nigeria. Nevertheless, monetary policy exerted relatively stronger short-term and long-term effects on commodity price targeting than fiscal policy. The researchers recommended that the Central Bank of Nigeria (CBN) ensure a productive market-friendly interest rate and money stock growth to dampen commodity price inflation through the use of monetary policy rate, cash reserve ratio, and open market operations. Additionally, federal government should ensure that fiscal mobilization and allocations are directed towards creation of the necessary enablers to drive real economic activities, which in turn transmits to moderate commodity price level. The monetary and fiscal policy institutions should ensure proper synthesis in the management of their injection components to achieve welfare-friendly commodity prices in Nigeria.

Suggested Citation

  • Christian Gbarawae NWIKINA & Victor AKIDI & Lasisi ABDULLAHI, 2025. "Monetary and Fiscal Policies’ Effects on Commodity Price in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(1), pages 2994-3009, January.
    • Handle: RePEc:bcp:journl:v:9:y:2025:i:1:p:2994-3009
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    References listed on IDEAS

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    2. Douglas W. Diamond & Raghuram G. Rajan, 2006. "Money in a Theory of Banking," American Economic Review, American Economic Association, vol. 96(1), pages 30-53, March.
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