Examining the impact of fiscal, monetary, and trade policy on environmental quality in Nigeria

Abstract

This study examines the impact of fiscal, monetary, and trade policies on environmental quality in Nigeria over the period 1990 to 2025. As a resource-dependent economy, Nigeria’s macroeconomic policies have often prioritized growth and stabilization with limited attention to their environmental consequences. However, with growing environmental degradation, energy- related emissions, and Nigeria’s commitment to sustainable development, understanding the relationship between macroeconomic policy instruments and environmental quality has become increasingly critical. The study aims to assess how government spending, monetary expansion or contraction, and trade openness have influenced environmental quality. A quantitative time series econometric technique will be employed, key tools will include Augmented Dickey-Fuller tests, Johansen cointegration, Vector Error Correction Models (VECM), and Granger causality tests will be used to estimate both short- and long-run relationships between the variables. The expected findings will provide insight into how macroeconomic policy frameworks can be reoriented to align economic management with environmental sustainability. The study will contribute to the policy discourse by offering recommendations for integrating environmental considerations into fiscal, monetary policy design, and trade policy formulation in Nigeria.