Citation:

Uzoma Kelechi Promise, Eke Bennett, Eguzoro Faustina Nkeiruka, Eze Emmanuel. "Monetary–Fiscal Policies Coordination and Business Sustainability in Nigeria" International Research Journal of Economics and Management Studies, Vol. 2, No. 4, pp. 622-629, 2023.

Abstract:

Price stability, balance of payments balance, stable and sustainable business development, and economic growth that can improve people’s quality of life are the primary objectives of macroeconomic policies in most countries (Ojo, 2000). Fiscal policy and monetary policy are two important tools that governments use to achieve economic stability in the economy (Wren-Lewis, 2011). Monetary policy uses financial tools, including the money supply, credit, and interest rates, to accomplish macroeconomic objectives. In contrast, fiscal policy uses government expenditures, involving taxes and borrowing, to ascertain the economy’s overall demand. This study used the ARDL model to identify how fiscal and monetary policies contributed to Nigeria’s economic expansion and, in turn, promoted corporate sustainability. Monetary and fiscal policies were the independent variables, and real gross domestic product was the dependent variable. Interest rates and inflation rates were included as control variables. The results of the ARDL modeling study showed that monetary policy, excluding interest rates, is highly responsive to changes in fiscal policy, but the reverse is not true. The long-term and short-term signs of inflation are negative. This means that higher inflation rates have a negative impact on economic performance. Therefore, it is suggested that the government initiates an unproductive dialogue and implements complementary measures and effective communication between monetary and fiscal policy.

References:

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Keywords:

Monetary Policy, Fiscal Policy, Business Sustainability, Economic Growth.