Impact of monetary policy on economic growth in Nigeria (1990-2020)
DOI:
https://doi.org/10.24191/jeeir.v11i1.19216Keywords:
Economic growth, Monetary policy rate, ARDL, NigeriaAbstract
Improving the rate of growth of real Gross Domestic Product (RGDP) has continued to be the most important policy of many countries, especially, the developing ones. Given the importance of ensuring economic growth in reducing poverty and ensuring improved welfare, it is imperative to identify its various determinants. Studies have identified the various determinants of economic growth, however, sustained economic growth continues to be a misery in Nigeria. This present study aims to determine the impact of monetary policy on economic growth in Nigeria. The study examined monetary policy on economic growth in Nigeria. In doing this, the study employed a time series data between the periods of 1990-2020. The methodology used involved examining the stationary nature of the data using Augmented Dickey-Fuller test and an ARDL bond test for examining the presence of long run relationship among the variables of the study. The short run regression conducted using ARDL regression method showed that monetary policy is an important determinant of economic growth in Nigeria. The two indicators of monetary policy used (Monetary Policy Rate, MPR and Money Growth Rate, M2) exert a significant impact on economic growth in Nigeria. Based on the findings, this study concludes that monetary policy significantly affects economic growth in Nigeria. It is recommended that policy makers in Nigeria should improve the monetary policy in such a way to increase the economic growth in Nigeria.
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