EFFECT OF MONETARY AND FISCAL POLICES ON POVERTY REDUCTION IN NIGERIA (1990-2023)

This study empirically evaluated the effect of monetary and fiscal policies on poverty reduction in Nigeria from 1990 to 2023. The chosen secondary time series data were extracted from the Central Bank of Nigeria Statistical Bulletin and World Bank Database, 2023 publications. Poverty rate was specified as a function of interest rate, broad money supply, government expenditure, tax revenue and budget deficit. The study adopted Augmented Dickey-Fuller Breakpoint tests to check for maximum order of integration of the variables used, and all the variables were between zero I(0) and one I(1). The Johansen test for cointegration analysis showed evidence of long run relationship among the variables. Findings from the FMOLS model revealed that interest rate and budget deficit had impacted insignificantly-positive on poverty level, broad money supply and tax revenue had impacted significantly-positive on poverty level in the Nigerian economy within the period under study, whereas government expenditure vindicated the widening poverty gap in the economy. The Granger causality result showed a significant one-directional causality relationship running from POVr to TAXREV (POVr→TAXREV) between tax revenue (TAXREV) and poverty rate (POVr), within the period under the study. This was evident in their probability values (p-values = 0.0725 & 0.0033) which were greater and less than 0.05 within the period under the study. Sequel to the findings, the study recommends, among others, that it is imperative therefore, for the monetary authorities to review the monetary and fiscal policy measures in the economy; so as to accommodate a reasonable and easy-to-assuage inflationary spiral in the economy, as against the existing trend; there is the dire need of downward tax review in the country so as to enable the private sector, individuals and salary income earners to be left with reasonable balances for further investments in the economy; this will foster an improved productivity in the country.