Causal analysis of fiscal-trade-policies uncertainty and economic growth in Nigeria: recalling economic policy corrective actions

Nigeria’s economic growth has proven to be unsustainable without resilience and consistent policy support. This economic issue remains of concerned and requires recall of economic policy corrective actions. This study extends prior work by simultaneously modeling fiscal, trade, and uncertainty variables over a long time horizon (1980–2022) in the Nigerian context, with specific emphasis on policy volatility in constraining macroeconomic policies stability. The research employs the ARDL and Granger causality methods to analyze the short- and long-term relationships among these variables. The results of ARDL regression confirmed the cointegration among the variables of trade openness and export positively impacting growth in Nigeria in line with the relative advantage growth. While import is negative and significantly relation to growth. Despite the facts that long-run significant are not validated for government expenditure on education and infrastructure disturbances, their long-term economic significant remains theoretically expected justified by significant of short-term estimates which informed short-term policy efficiency. Further, the causality analysis provides further justification on the role of respective policy channels impacting economic growth. While, policy uncertainty confirmed to be impacting economic growth negatively in line with policy makers’ expectation of asymmetric policy responses of economic uncertainty. This research provides valuable insights into economic policies and necessary corrective actions that are vital for sustaining Nigeria’s economic growth. Specifically, strengthening fiscal policy (investments in education and infrastructure) can enhance trade policy (trade openness, import and export) that could stimulate and sustain economic growth. In addition, this research detects new channel of economic policy inefficiency due to policy uncertainty caused lack of policy resilience and consistency has hindered the fiscal-trade-growth synergy in Nigeria.