ABSTRACT

The study was am empirical effort to analyze trade liberalization, relative effectiveness of fiscal and monetary policies on economic growth in Nigeria for a robust fiscal period of forty years (1981-2021). The objectives were to examine if Trade Liberalization (Trade Openness), Monetary policy and Fiscal policy have significant effect on Economic Growth Rate (GDPGR) in Nigeria; to investigate if monetary or fiscal policy has a better effect on economic growth; and to trace whether there was long relationship between the variables in the model. Monetary Policy Instruments (Exchange Rate, Monetary Policy Rate and Money Supply) on Economic Growth Rate (GDPGR) in Nigeria and ascertaining the effect of key Fiscal Policy Instruments (Government Expenditure and External Debt) on Economic Growth Rate (GDPGR) in Nigeria. Furthermore, the study regressed gross domestic product growth rate (GDPGR) against trade openness (TOP), exchange rate (EXR), monetary policy rate (MPR), government expenditure (GXE) and external debt (EXD) obtained from central bank of Nigeria annual financial report 2022, through augmented dickey and fuller test for stationarity, auto regressive distributed lag bound test for the estimation of long run relationship among the series was carried out, with empirical evidence suggesting the existence of a sustainable long run association between the variables used to proxy trade liberalization, fiscal policy measures, monetary policy and economic growth rate in Nigeria, while ARDL error correction estimate established satisfactory speed of adjustment from long run disequilibrium to short run. Further empirical underlining indicated that; government capital and recurrent expenditure provided a positive association ship with economic growth rate in Nigeria between 1981 and 2021. Thus, increasing government expenditure for the period by one more percent resulted to an increase of 22.89% increase on economic growth rate in the short, while in the long run, a percent increase resulted to 97.95% surge on economic growth in the Nation. Also, it was obtained that expansive monetary supply in the short run exerted a negative influence over economic growth agenda of the Nation, thus increasing the quantity of money in supply resulted to a 68.6% decline on economic growth, while in the long run, increasing the supply of money also indicated a negative economic influence, with a declining trend of 30.30% significant percent. The study therefore recommended that, government through the monetary authorities in Nigeria should moderate the supply and minting of the naira indiscriminately, without proper consultations and consideration of prevailing macroeconomic trends in the economy. Based on the forgoing, the study concluded that, trade liberalization, fiscal and monetary policy instruments are they sole microcosm and macrocosm of sustainable economic growth agenda attainment in the twenty first century economy.