IMPACT OF MONETARY AND FISCAL POLICY IN CONTROLLING UNEMPLOYMENT IN NIGERIA

Okwara, Cornelius. C.

Department of Banking & Finance

The Federal Polytechnic, Ilaro

Email: collins.okwara@gmail.com

ABSTRACT

This paper examines the link between monetary and fiscal policy in controlling unemployment in Nigeria using Ordinary Least Square method of estimation between the period 1991 and 2015. The research work made use of money supply and government expenditure as independent variables while the dependent variable was unemployment rate. Data was sourced from National Bureau of Statistics and Central Bank of Nigeria Statistical Bulletin. A multiple linear regression was formulated as model for the study. The findings revealed that money supply and government expenditure have significant impact on unemployment rate in Nigeria as shown by t-test and their probabilities. The F-test also showed that the models are significant in explaining the relationship that exists between all the variables. Therefore, the study concluded that monetary and fiscal policies both have significant impact on unemployment in Nigeria. Based on the findings from the data analysis in this research work, one can conclude that money supply and government expenditure has an important role to play in reducing the level of unemployment that the country is faced with and that if monetary and fiscal policy tools such as these are properly managed and implemented the resultant effect will be positive. The study recommends that monetary policies implemented by CBN should promote favourable investment atmosphere. The use of capital expenditure as a tool for long term growth should also be considered by policy makers.

Keywords: Fiscal Policy, Monetary Policy, Money Supply, Government Expenditure, Unemployment.