ABSTRACT

This study has attempted to investigate if macroeconomic policy co-ordination serves as a tool for economic stabilization in Nigeria. The study exhausted theoretical, conceptual and empirical methods in trying to achieve its objectives. The study used the Ordinary Least Square approach to empirically investigate the relationship macroeconomic policy and economic stabilization in Nigeria. The findings of this study can be summarized as; Fiscal policy instruments used are jointly significant at explaining economic stabilization in Nigeria. Furthermore, monetary policy instruments used are jointly significant in explaining economic stabilization in Nigeria. Also Macroeconomic policy co-ordination is sufficient at explaining economic stabilization in Nigeria. Based on the findings of this study, it therefore recommended that; Channels through which fiscal policy is transmitted should be reviewed so as its effect can be felt in the economy for which it was meant to serve. Particular attention should be paid to the government revenue generation strategy as it can be seen that there is a positive relationship between government revenue and economic growth in Nigeria. The political and economic environment should be stabilize to drive business growth and subsequently government revenue. Also, Mechanism through which monetary policy is transmitted should also be reviewed to obtain maximum result from the conduct of monetary policy in Nigeria. Government should increase money supply (with caution so as to avoid escalating inflation) to boost investment which will in turn lead to economic growth. Finally, Macroeconomic policy co-ordination should be carefully watched to avoid round tripping in management of the macroeconomic environment by way of effectively incorporating and educating both fiscal and monetary authorities on the objectives of each institution for a given fiscal year or long period of time.