Relative Importance of Public Debts and Money Growth on Inflation in Nigeria

Abstract

This paper investigates the relative importance of public debts and money growth on inflation in Nigeria from 1980 to 2015. Annual secondary data collected from World Development Indicators were used for the analysis. After examining the behaviour of the time series, Unrestricted Vector Autoregressive (VAR) technique of estimation is employed with a view to determining whether inflation is a monetary or fiscal phenomenon in Nigeria. The results show that, both in the short and long run, public debts accounts for a sizeable percentage in the variation of inflation rather than growth in monetary supply, making inflation a fiscal phenomenon in Nigeria. We therefore recommend that the attainment of fiscal solvency would be more effective in achieving price stability in Nigeria.

Fiscal Policy and Growth of Real Economic Activities in Nigeria (1980-2016)

“…In Nigeria, strategies to secure sustainable economic growth and stable price regime over time, following the perceived ineffectiveness of monetary policy to guarantee the objectives, have lent credence to desirability of fiscal policy. More importantly, discussion on the efficacy of fiscal policy as mechanisms for stimulating economic growth and achieving stable price regime has been unsettled, given the inconsistent results of empirical studies (Abu-Bader and Abu-Qarn, 2003;Oyeleke and Orisadare, 2018). More importantly, attempts to secure sustainable economic growth over time and stable price regime aimed at engendering reduction of poverty level, following the perceived ineffectiveness of monetary policy to guarantee the objectives, have lent credence to desirability of fiscal policy in Nigeria.…”