Monetary Policy and Economic Growth in Nigeria: An Autoregressive Distributed Lag (ARDL) Analysis.
DOI:
https://doi.org/10.14738/assrj.63.6273Abstract
The study assessed the impact of monetary policy on economic growth in Nigeria. Three objectives guided the study. It employed quarterly data spanning 1986:Q1-2018:Q4, and used the Autoregressive Distributed Lag (ARDL) model, and the Granger causality test to carry out its empirical analysis and achieving its objectives. Findings from the study revealed that the monetary policy rate (MPR) had a positive impact on economic growth, but it was however not statistically significant. The broad money supply (M2) as a monetary policy instrument had a much more positive and highly statistically significant impact on economic growth in Nigeria. As such, the study recommended that the CBN should embark on a comprehensive monitoring of monetary instruments and aggregates and place less emphasis on inflation targeting (IT) alone. It is important to use other instruments which the central bank can control effectively like the broad money supply (M2) as it is more effective on the economy.
Keywords: Monetary policy, Economic growth, Monetary Policy Rate, Broad Money Supply, New Consensus Macroeconomic.
References
Arestis, P. (2007). What is the new consensus in macroeconomics? in Arestis, P. (ed.) Is there a new consensus in macroeconomics? Hampshire: Palgrave Macmillan.
Ayodeji, A., & Oluwole, A. (2018). Impact of Monetary Policy on Economic Growth in Nigeria. Open Access Library Journal, 5, 1-13.
Bean, C. (2007). Is there a new consensus in monetary policy? in P. Arestis (Ed.) Is there a New Consensus in Macroeconomics? Hampshire: Palgrave Macmillan.
CBN (2018). Monetary policy. Central Bank of Nigeria. Retrieved from https://www.cbn.gov.ng/monetarypolicy/conduct.asp
Celina, U.C. (2014). Monetary policy and economic growth of Nigeria. Journal of Policy and Development Studies, 9(1), 234-247.
Chand, S. (2018). The major role of monetary policy in a development economy. Your Article Library. Retrieved from http://www.yourarticlelibrary.com/economics/money/the-major-role-of-monetary-policy-in-adevelopment-economy-economics/11025
Clarida, R.J. Galí, R. & Gertler, M. (1999). The science of monetary policy: A new keynesian perspective. Journal of Economic Literature, 37(4), 61-70.
Fontana, G. & Palacio-Vera, V. (2007). Are long-run price stability and short-run output stabilisation all that monetary policy can aim for? Metroeconomica, 58(2), 269-98.
Fontana, G. (2009). Whither new consensus macroeconomics? The role of government and fiscal policy in modern macroeconomics: in Hein, E., Niechoj, T. & Stockhammer, V. (Eds.) Macroeconomic policies on shaky foundations -whither mainstream economics? Marburg: Metropolis-Verlag.
Greg, E.E., Udede, C.C. & Hope, I.U. (2015). The impact of monetary policy on the banking sector in Nigeria. International Journal of Economics, Commerce and Management, 3(5), 1015-1035.
Inam, U.S., & Ime, B.S. (2017). Monetary policy and economic growth in Nigeria (1970-2012). Advances in Social Sciences Research Journal, 4(6), 41-59.
Meyer, L.H. (2001). Does money matter? Federal reserve bank of St. Louis: Review, 83(5), 1-16.
Michael, C.O. (2012). Monetary policy in developing countries: The case of Nigeria (Doctoral dissertation). University of Leeds, Leeds University Business School.
Mugume, A. (2011). Monetary transmission mechanism in Uganda. Final Report, AERC Working Paper, Nairobi, Kenya, JEL Classification Numbers: O53, E4, E5
Mustafa, I. (2013). Effects of monetary policy on macroeconomic performance: The case of Nigeria (Doctoral dissertation). University of Greenwich, London.
Nasko, A.M. (2016). Impact of monetary policy on the economy of Nigeria. Pyrex Journal of Business and Finance Management Research. 2(10), 163-179.
Okwori, J., & Abu, J. (2017). Monetary policy and inflation targeting in Nigeria. International Journal of Economics and Financial Management, 2(3), 1-12.
Setterfield, M. (2006). Is inflation targeting compatible with post-Keynesian economics? Journal of Post Keynesian Economics, 28(4), 653-671.
Thao, B.T.N. (2017). An evaluation of monetary policy in Vietnam (Master’s thesis). School of Business, Aalto University, Vietnam.
Uchendu, O.A. (2009). Monetary policy management in Nigeria in the context of uncertainty. Bullion, Central Bank of Nigeria, 33(3), 1-6.
Ufoeze, L.O., Odimgbe, S.O., Ezeabalisi, V.N., & Alajekwu, U.B. (2018). Effect of monetary policy on economic growth in Nigeria: An empirical investigation. Annals of Spiru Haret University Economic Series, 1, 2018, 123-140.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2019 Advances in Social Sciences Research Journal
This work is licensed under a Creative Commons Attribution 4.0 International License.
