American Research Journal of Humanities Social Science (ARJHSS)R) 2019 ARJHSS Journal www.arjhss.com Page |26 American Research Journal of Humanities & Social Science (ARJHSS) E-ISSN: 2378-702X Volume-02, Issue-08, pp-26-38 August-2019 www.arjhss.com Research Paper Open Access Relative Impact of Monetary and Fiscal Policy on Output Growth in a Small-open Economy Miftahu Idris Department of Economics, Taraba State UniversityJalingo; Nigeria. *Corresponding Author: Miftahu Idris ABSTRACT: Both monetary and fiscal policies are employed across the globe particularly in small-open economies like Nigeria to guide the economy towards the path of sustainable growth, ensure stable price and further creates a conductive atmosphere for domestic and foreign investment. In lieu of that, this study examines the monetary and fiscal policy of the Nigerian economy over the period of 1980 to 2017 using annual time series data as well as evaluates the growing trend in critical indicators with the view to determining the existence of possible relationship. Using the OLS technique and the cointegration test, results indicate that both monetary and fiscal policy have positive and significant impact on economic growth. In addition, further result shows that monetary policy is more effective in Nigeria than fiscal policy for the period under consideration. As such, there is need to impose fiscal discipline in the public finance since monetary policy cannot attain the desired goal given the existence of fiscal imbalances. The public sector should safeguard the maintenance of a steady macroeconomic environment which ensure that monetary aggregates are operating within the growth limits. KEYWORDS: Monetary policy, fiscal policy, economic growth, Nigerian economy. I. INTRODUCTION Across the international boundaries, both monetary and fiscal policies are adopted to ensure the attainment of sustainable economic growth while addressing other macroeconomic challenges. These macro policies are vibrant and dynamic towards achieving a common objectives for maintaining price stability, balance of payment equilibrium, high and rapid economic growth, increases employment generation and raises economic welfare. The effectiveness of these policies in realising its desired goals dependlargely on the working economic environment and the institutional framework implemented by the government. It appears difficult for countries to achieve these goals all together, hence policy makers need to identify the nation’s priority target in the pursuit of economic policy. Conceptually, monetary policy encompasses the utilisation of various approaches with the aim of regulating the value, supply and cost of money in consistent with the projected level of economic activities. However, fiscal policy involves a deliberate efforts by the public sector towards expenditure and taxes with the greater aim of influencing the level and growth of aggregate demand, employment and output. In recent years, the Nigerian government has progressively improved its monetary and fiscal policy operations that are utilised to control the aggregate economy. The monetary and fiscal policy affects not only the growth of aggregate economy, but also established a significant impact on the micro environment. Both the micro and the macro environment have been unstable in Nigeria most particularly in the recent years with the economy being expose to shocks (both internal and external) from the domestic market prices and international exchange policy. More so, despite the response and involvement of monetary management through the manipulation of money supply combined with budget deficit, the economy is yet to produce any meaningful sustainable growth. In addition to other complications, Nigeria like other small-open economies; is fronted with various developmental challenges including insecurity and poor infrastructural facilities. Despite numerous economic and social investment programmes undertaken by the government in previous decades including the poverty alleviation programme, SURE-P and the NPOWER programmes, the level of income per capita is still insignificant compare to other developing countries across the globe, most particularly within the Sub-Saharan region. It is maintained that a proper conduct of monetary and fiscal policy