COUNTER CYCLICAL POLICIES AND THE PARADOX OF INFLATIONARY RECESSION IN NIGERIA
- Joseph Okwori
- John Abu
- ( paper pages. 1 - 21 )
Abstract
This study examined the feedback of inflationary recession based on its response tomonetary and fiscal policies in Nigeria. This is against the postulation of A.W.Phillips in 1958 who assumed a negative relation between inflation andunemployment. The paper used data from 1971 – 2015 (the period underlying theemergence of stagflation) and adopted the Ordinary Least Square (OLS) method togive empirical content to the theoretical postulations. The study found out thatmonetary and fiscal policies are not significant in curbing inflationary recession inNigeria and needs to be re-examined. Also, the fairly strong relationship between thevariables suggests that there is still weak complementarity between monetary andfiscal policies in Nigeria. Comparatively, fiscal policy seems more effective thanmonetary policy in reducing economic stagnation and inflation in Nigeria. Also, thePhilips relationship appears to be inverse in the Nigerian economy and the responseof stagflation to monetary and fiscal policies is still inconsequential. The studytherefore recommends that, first; the fiscal authority should complement themonetary authority by providing a good regulatory environment that will encouragethe appropriate conduct of monetary policy in Nigeria, second; to reduce inflationaryrecession, fiscal policies should be focused on the objective of easing labour marketconditions and increasing productivity, and third; to buffer internal balancemeasures of monetary policy, the monetary authority should avoid rapid changes inthe rate of monetary growth as this would lead to variations in the rate of inflation.
Citation
Joseph Okwori, John Abu.
2018.
"COUNTER CYCLICAL POLICIES AND THE PARADOX OF INFLATIONARY RECESSION IN NIGERIA"
The Nigerian Journal of Economic and Social Studies,
60 (1): 1 - 21.
JEL Classification
458, H5, P24, P44
