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An examination of inter-regional spillover effects of macroeconomic policies in Nigeria

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  • Olajide, Victor

Abstract

Regions in a federal system, as in the case Nigeria, tend to have economic characteristics that diverge from each other and while monetary and fiscal policies appear to be strongly nationally oriented their importance and relevance appear to be regionally determined. However, also important, and more important for this study, is the view that regional macroeconomic policies – that is, the fiscal policies of the state or regional governments and the implications of national monetary policies for regional economies – do not only impact on the source region but can also transcend the borders of the source region to other neighboring regions and cause adjustments or distortions that may have important macroeconomic implications for the regions in a federating system. Towards this end, this article investigates, using the aggregate supply, aggregate demand and balance of payment (AS/AD/BP) framework with special assumptions that capture the characteristics of the regions in a federating system typical of Nigeria, the macroeconomic interconnectedness of regions in a federating unit and considers the macroeconomic spillover effects of the fiscal policies of regional governments as well as the regional implications of national monetary policies.

Suggested Citation

  • Olajide, Victor, 2015. "An examination of inter-regional spillover effects of macroeconomic policies in Nigeria," MPRA Paper 69242, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:69242
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    References listed on IDEAS

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    1. Robert J. Barro & Xavier Sala-i-Martin, 1991. "Convergence across States and Regions," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(1), pages 107-182.
    2. Alexandre Porsse & Eduardo Haddad & Eduardo Ribeiro, 2005. "Economic Effects Of Regional Tax Incentives: A General Equilibrium Approach," Anais do XXXIII Encontro Nacional de Economia [Proceedings of the 33rd Brazilian Economics Meeting] 124, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    3. Sergio Rey & Brett Montouri, 1999. "US Regional Income Convergence: A Spatial Econometric Perspective," Regional Studies, Taylor & Francis Journals, vol. 33(2), pages 143-156.
    4. Maurice Obstfeld and Giovanni Peri., 1998. "Regional Nonadjustment and Fiscal Policy: Lessons for EMU," Center for International and Development Economics Research (CIDER) Working Papers C98-096, University of California at Berkeley.
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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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