The Impact Of Monetary Policy On The Economic Growth In Nigeria (1980-2013)

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Distortion of price has been a major bottleneck to the attainment of growth in developing countries. Monetary policy serves as the macroeconomic tool used to combat and alter the negative outcomes in order to maintain viability and balance in the economy. However, the dissatisfaction of the actual outcome in relation to the targeted outcome has led to the discussion on the roles and effects of monetary policy on the economy in terms of growth. The study investigated the impact of monetary policy on economic growth in Nigeria. The research utilized data gathered from the World Bank and various statistical bulletins
and annual reports from the Central Bank of Nigeria for the period 1986-2013. The Cointegration method is employed in the analysis of the data gathered with the aid of E-Viewson the model consisting of exchange rate, interest rate, broad money supply and inflation as the exogenous variable while Gross Domestic Product is the endogenous variables. The findings indicate that monetary policy instrument (exchange rate) has a positive impact on the Gross Domestic Product by playing a crucial role in the increase in productivity for the 29 years span period and inflation, broad money supply, interest rate have negative impact on Gross Domestic Product. The study recommends that the monetary policy authorities and other financial regulatory body have to come up with possible solution that can help in addressing the long time
negative influence of inflation, broad money supply and interest rate on economic growth. They must also ensure that the stability of the exchange rate is protected in order to ensure steady growth in the economy.

Title Pages i
Certification ii
Dedication iii
Acknowledgement iv
Table of contents vii
Lists of Tables viii
Abstract ix

1.1 Background to the study 3
1.2 Statement of the problem 4
1.3 Objectives of the study 5
1.4 Research hypothesis 5
1.5 Significance of the study 6
1.6 Scope of the study 6
1.7 Organization of the study 7

2.0 Introduction 8
2.1 Conceptual reviews on monetary policy and economic growth 9
2.1.1 What is economic growth? 10
2.1.2 Objectives of monetary policy 10 Attainment of High Rate of Employment 11 Exchange Rate Stability 11 Accelerating the pace of Economic Growth and Development 11 The Maintenance of Balance of Payment Equilibrium 11
2.1.3 Techniques of Monetary Policy Control 12
2.1.4 A review of the monetary policy before the Structural Adjustment Programme (SAP). 14
2.1.5 Monetary policies under the Structure Adjustment Programme (SAP) 21
2.2 Theoretical literature of monetary policy 22
2.2.1 Classical theorist 23
2.2.2 The Monetarist 23
2.2.3 The Modern Approach 24
2.2.4 Super-Neutrality of money 25
2.3 Empirical review 25
2.3.1 Empirical review on monetary policy and economic growth in Nigeria 30
2.3.2. Empirical review on monetary policy and economic growth in other developing countries 32
2.3.3 Empirical reviews on monetary policy and economic growth in developed countries 40

3.1 Introduction 41
3.2 Research Design 41
3.3 Sources and method of data collection 42
3.4 Model Specification 42
3.5 Measurement of variables 43
3.5.1 Dependent Variables 43 Gross Domestic Product 43
3.5.2 Independent Variables 43 Inflation 44 Exchange Rate 44 Broad Money Supply 44 Interest Rate 45
3.6 Method of Analysis 45
3.7 A’ Priori Expectation 45
3.7.1 Economic Criteria 46
3.7.2 Econometric Criteria 46
3.7.3 Statistical Criteria 46

4.1 Introduction 49
4.2 Statistical Criteria Method of Model Evaluation 51

5.1 Summary 53
5.2 Conclusion 54
5.3 Recommendations 54

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