Unemployment And Monetary Policy In Nigeria And Economic Analysis 1980 – 1995)

On the theoretical level, both Keynesians and the monetarists have considered the issue of unemployment and monetary policy a defending way of transmission mechanisms.  Their arguments fuss essentially on whether monetary or fiscal policy is able to directly affect real variables as employment but their various lines of demonstrations would not be repeated here as the school of thought (the monetarist) favour the use of the monetary policy to solve the unemployment problem.

This they argued would be transmitted through other variables as interest rate and output.

Based on the theme monetary phenomenon quantitative approaches have been taken in relation to policy making and unemployment by researching.  These are rational expectations monetary models such as those of Lucas. (1972, 1973).  Challe (1975) and Barno (1976) and Muth (1961) when stipulated and confirm that the government in its monetary policy is able to affect real economic variable like the unemployment rate or the level of output, although the first two studies differentiate the monetary variable into expected and unexpected in the carrying out their investigation.  Barno (1976) took a step further to find a correlation and the feedback affects of these variable – money growth and unemployment in Nigeria.  He estimated series of equations for money growth and unemployment with each having its logged values serving as explanation variable(s) among others for the other.  His conclusions, which are of relevant to this study elites that increases in federal expenditure above its normal level reduce unemployment as an independent variable.