Volume 8, Issue 5, October 2019, Page: 303-313
Monetary Policy and Economic Growth in Developing Countries: Evaluating the Policy Nexus in Nigeria
Miftahu Idris, Department of Economics, Taraba State University, Jalingo, Nigeria
Received: Jul. 3, 2019;       Accepted: Aug. 7, 2019;       Published: Aug. 26, 2019
DOI: 10.11648/j.ijber.20190805.17      View  103      Downloads  57
Abstract
While there are numerous studies on the relationship between monetary policy and economic growth, evaluating the policy nexus between the two phenomena remain inconclusive. Undeniably, monetary policy is believe to influence the employment level, price stability, growth of aggregate output and equilibrium in the balance of payment- for the case of developing economies. But the magnitude of its influence largely depends on how it is conducted through various channels and the independency of the apex bank to select the appropriate instruments for formulating the monetary policy. In lieu of that, this study examines the relationship between monetary policy and economic growth in Nigeria using time series data covering the period of 1980 to 2017. The study employs the Cointegration test and the Ordinary Least Square (OLS) technique with the view to estimating the model coefficients and showcase the policy nexus between the variables. Result indicates the existence of long-run relationship between monetary policy indicators and economic growth. Further empirical findings show that money supply has positive effect, while both exchange rate and interest rate have negative effect on the real GDP. As such, monetary authorities in Nigeria should adequately managed and monitored the growth level of money supply in order to realise the desired growth level. Given the socio-economic and political conditions in Nigeria, there is growing needs to formulate appropriate monetary measures which might encourage borrowing through sound and productive interest rate as well as stable exchange rate.
Keywords
Monetary Policy, Economic Growth, Cointegration Test, OLS Technique, Nigeria
To cite this article
Miftahu Idris, Monetary Policy and Economic Growth in Developing Countries: Evaluating the Policy Nexus in Nigeria, International Journal of Business and Economics Research. Vol. 8, No. 5, 2019, pp. 303-313. doi: 10.11648/j.ijber.20190805.17
Copyright
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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