Monetary and Fiscal Policies Conflict and Economic Development in Nigeria

Abstract

This article focuses on the examination of the impact of monetary and fiscal policy conflict on economic development in Nigeria. The work seeks to explore the trend of monetary and fiscal policy tools and economic development in Nigeria as well as to establish the relationship that exists between the macroeconomic policy variables and economic development in Nigeria from 1990 to 2009. The desk and exploratory research design are used with secondary data collected from the Central Bank of Nigeria statistical bulletin and Bullion and the internet. Descriptive and inferential statistics have been used in analyzing the data. The paper shows that from 1990 to 2009, the government in Nigeria relied on budget and corporate tax rates as fiscal policy tools while relying heavily on the monetary policy rate (MPR) and interest rate as the monetary policy tools. These macroeconomic policy tools exerted both positive and negative influences on economic development in the country. The negative impact has been quite severe in putting serious pressure on the systems. This is because economic regulators have not been able to identify and define specific areas of conflict in their policy goals, tools, and actions. This hinders their ability to achieve a balancing effect in macroeconomic policy administration and the attainment of a reasonable level of economic development in the country. To this end, it was recommended that possible areas of conflict in macroeconomic policy goals, tools, and actions be analyzed and appropriate strategies adopted to minimize such conflicts through in-built stabilizing mechanisms such as policy monitoring, review, and adjustment. Such mechanisms have the potential of creating a balancing effect and enhancing sustainable economic development in the country.