The Interaction of Fiscal Policy and Monetary Policy on the Stock Market Performance in Nigeri

The stock market is an important aspect of an economy, which helps contribute to the growth of such an economy. This market is affected by a lot of factors such as the fiscal policy and monetary policy, to enhance its growth, these policies are the key focus of this study. These policies have various macroeconomics variables attributed to them. These macroeconomic variables are broad money, interest rate, inflation rate, GDP, and government expenditure, which are used in this study. This study is an update to the few studies done on the interaction of the fiscal policy and monetary policy on the Nigerian stock market and also checked the causality of fiscal policy, monetary policy, and the stock market. The study made use of econometrics to run a regression model, consisting of a dependent variable and independent variables. Using a time series data, from the period of 1981 to 2018. The result of the ARDL bounds test used, indicates that all the macroeconomic variables proxy to both Fiscal and Monetary policy are all significant and indicating a long run relationship toward the stock market performance in Nigeria. Whereas, the ARDL model shows the broad money, inflation rate, and real interest rate imposing a negative relationship on the stock market, while GDP and government expenditure are both positive towards the stock market in the long run. Thus in the short run, broad money and GDP insert a positive effect on the stock market, and real interest rate, government expenditure, and inflation rate impose a negative impact on the stock market performance in Nigeria. Keywords: Fiscal Policy, Monetary Policy, Stock Marke