Journal of Economics and Development Studies

The Effects of Monetary and Fiscal Policy on the Stock Market in Nigeria
Isaac Chii Nwaogwugwu, PhD

Abstract
The main objective of this paper is to empirically examine the impact of macroeconomic policy and stock market behavior in Nigeria. Broad Money, Interest Rate, Government Expenditure, Tax Revenue and Gross Domestic Product have been chosen as indicators of macroeconomic policy while stock prices are used to represent stock market behavior. The Methodology used is the ARDL bounds testing approach. The empirical findings show that money supply and interest rate have statistically significant effects on the stock market in the short and the long run. Similarly, government spending and taxation have statistically significant effects on the stock market in the short and the long run. This therefore, suggests that macroeconomic policy actions have significant effects on the stock market in Nigeria both in the short and the long run. Considering that the main channel of such influence is primarily through the monetary and fiscal operations it becomes necessary the authorities to employ fiscal and monetary policy in tandem rather than in isolation in order to realize the full potentials of the stock market activities in the countries.

Full Text: PDF     DOI: 10.15640/jeds.v6n1a8