The Effect of Monetary Policy on Economic Growth in Nigeria

The Effect of Monetary Policy on Economic Growth in Nigeria

ABSTRACT

The purpose of this project is based on the effect of monetary policy on economic growth in Nigeria. This work discussed the meaning of monetary policy as monetary management techniques put in place by the government through the central bank to control money stock in order to influence broad macro-economic objectives.

The data used is a secondary data collected from central bank of Nigeria statistical bulletin between the periods of 1981 to 2014, and multiple regression analysis of ordinary least square (OLS) were used.

The variables of the model includes: GDP Growth as the dependent variable and broad money supply, interest rate, and monetary policy rate as the independent variables.

The result shows that money supply is statistically significant, which means that money supply influences growth positively in Nigeria.

On the other hand, interest rate and monetary policy rate are statistically insignificant showing that interest rate and monetary policy rate are negatively influences economic growth in Nigeria.

Government should increase its expenditure on productive sectors to boast economic growth alongside with monetary policy.

INTRODUCTION

Monetary policy are monetary management techniques put in place by the government through the central bank to control money stock that is supply of money in order to influence broad macro-economic objectives which include price stability, high level of employment, sustainable economic growth and balance of payment equilibrium.

These broad objectives are achieved through the use of appropriate instruments, depending on which objective the policy formulated want to achieve on the level of development of the country.

Over the years, the major goals of monetary policy have often been the two later objectives namely: Inflation targeting and exchange rate policy.

REFERENCES

Adesoye, A. B; Maku, O.E; and Atanda, A. A. (2012). “Is Monetary Policy a growth stimulated in Nigeria? A vector Autoregressive approach”  Munich Personal RePEC Archive (MPRA). Paper No. 35844  Pp.1-24.

Ahuja, H. L. (2008). Modern Economics 17^th Revised Edition. S. Chand and Company PVT. LTD, RAM NAGAR, NEW DELHI.

Akujuobi, L. E. (2010 ) . Monetary Policy and Nigeria’s Economic Development. African Research Review. An International Multi-Disciplinary Journal Ethiopia Vol. 4(4), serial No. 17.

Amassoma, D;  Nwosa, P. I;  and Olaiya, S. A. (2011). An Appraisal of Monetary Policy and its effect on macroeconomic stabilization in Nigeria. Journal of Emerging Trends in Economics and Management Science 2(3): 232 -237.

Baghebo, M. and Ebibai, T. S. (2014). “Monetary Policy and Economic growth in Nigeria. Asian Economic and Financial Review. Vol.4, No. 1, Pp. 20-32.