Searching for the Relative Potency of Monetary and Fiscal Policies in Selected African Countries: A Panel Data Approach to St. Louis Equation

Sesan Adeniji and Olaniyi Evans

MPRA Paper from University Library of Munich, Germany

Abstract: With the aid of the St. Louis equation, this study applies panel data technique to real variables of some selected African countries with extended data from 1970 – 2012. The outcomes support both Keynesian and monetarist positive policy assertions. The monetary base and government expenditure are viable instruments to stabilize output. The study, as well, finds that utilizing the monetary base as a policy tool is more potent than using government expenditure. This is in line with the predictions of Milton Friedman and Schwartz (1963) and other advocates of the St. Louis equation. Therefore, in order to attain higher output growth, these economies should rely more on monetary policy as compared with fiscal policy.

Keywords: Monetary Policy; Fiscal Policy; St. Louis Equation and Panel Data (search for similar items in EconPapers)
JEL-codes: C01 E52 E62 (search for similar items in EconPapers)
Date: 2013-12-22
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (2)

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