Effect of Fiscal and Monetary Policies on Industrial Sector Performance- Evidence from Nigeria

Abstract

We unearth the impact of monetary and fiscal policies (i.e. stabilization policies) on the performance of the manufacturing sector as a real sector in Nigeria, using an error correction mechanisms model, and discover that those policies has expected impact on output of the manufacturing sector in Nigeria both in  the short-run and long-run. Relationship among the stabilization policies on one hand and industrial or manufacturing sector out put on the other hand.The model makes use of time series data while ordinary least squared was the techniques of analysis, the data were filtered with use of augmented dickey fuller unit root test while Johansen co-integration test was used to justify the long-run relationship among all included variables. While the error correction model serves the basis for adjustment from short-run drift (disequilibrium) to long-run equilibrium through its speed of adjustment.The research work established that stabilization policy has a great impact on manufacturing sector performance and that if certain adjustment are made it would better the lots of the people by developing the sector, through Government fiscal policy and its monetary policy measures.

Keywords: fiscal and monetary policies, industrial sector, error correction model, Nigeria.