Application of Optimal Control Modelling Procedure for Determining the Impact of the Nigerian Monetary and Fiscal Policies on its Economic Growth

This study determined the impact of monetary and fiscal policy on economic growth in Nigeria. The study applied the optimal control theory as a method of analysis to check which of the policies ‘either monetary or fiscal’ exert more impact on the economy during the National Development Plan of 2021-2025. The first stage of the analysis showed that the fiscal policies can sustain an economic growth even if some monetary policies are failing. In the second stage of the work, the variables were subjected to optimal control modelling in order to know the actual level/magnitude of the policy-making effort needed for a continuous economic boost in Nigeria. The result revealed that monetary policy may be said to be very weak in Nigeria, which has led to the exchange rate in the parallel market to be as high as $1=N1200, with a very high inflation rate of 22.41%, hence, fiscal policy exerts more impact on the economy during the implementation of the NDP of 2021. The study concluded that in order to enjoy tangible and multiplicity of both Fn and Fs on the Nigeria economy, major control variables such as strengthened legislation and adequate value reorientation, reward for dignity and labor has to be sustained. From extant literature, it was observed that previous studies adopted econometric method for analysis, none has attempted to use optimal control theory using Nigeria data, this study intend to fill this gap by adopting Optimal Control Modeling as method of analysis.