The study differs from others by viewing macroeconomic stability in terms of price stability. This page provides nigeria inflation rate actual values, historical data, forecast, chart, statistics, economic calendar and news. Nigeria to what extent has the application of monetary policy in nigeria brought about sanity in the operation of commercial banks. The impact of mobile money on monetary and financial. This study was carried out to evaluate inflation accounting and control through monetary policy measures in nigeria from 1973 to 2010. Secondary data were used empirically to do the assessment. By exploring the impact of monetary policy in controlling inflation at a time when inflation is rising in nigeria makes it very significant. The study examined the impact of monetary policy on economic growth in nigeria for the period of 34 years 19812015. Measured against fiscal policy, monetary policy is said to be quicker at resolving economic shocks uniamikogbo and enoma, 2001. The finding shows that public investment negatively affects output growth implying that public expenditure has a crowding out effect on private investment.
Nigeria has experienced high volatility in inflation rates. The main purpose of this study is to empirically examine the effectiveness of monetary policy in controlling inflation in nigeria. Therefore, this study, the determinants of inflation in nigeria, will be studied using monetary policy variables broad money supply, exchange rate, one year. This project seeks to evaluate the effectiveness of the cbns monetary policy by assessing the extent to which the monetary policies have impacted on the growth process of nigeria using the major objectives of monetary policy as yardstick. Mar 14, 2017 in a nutshell, the aims of monetary policy are basically to control inflation, maintain a healthy balance of payments position for the country in order to safeguard the external value of the national currency and promote an adequate and sustainable level of economic growth and development. A general overview of monetary policy and inflation in the nigerian economy is the foundation upon.
Monetary policy and inflation in nigeria economy project topics. The impact of monetary policy on nigeria economy 1980. Objectives of the study this study basically aims at examining the impact of monetary policy on the economic development of nigeria via its impact. Abstract this research studied the impact of monetary policy on the growth of the manufacturing sector in nigeriafrom 1980 2016. The impact of monetary policy rate on inflation in nigeria. The study employed econometric model using ordinary least square ols to. Impact of monetary policy interest rate regimes on the. Impact of monetary policy on inflation control in nigeria munich. Objectives of the study this study basically aims at examining the impact of monetary policy on the economic development of nigeria via its impact on the banking activities. Monetary policy and its effectiveness on economic development. But our major concern will be to explore the efficiency of monetary policy in an economy in controlling inflationary pressure in an economy like nigeria. Furthermore, var granger causality test suggests the causation running from budget deficit to money supply. The time series data is the market controlled period covering 1986 to 2016.
Examine the effect of monetary policy on inflation in nigeria. Doc the impact of monetary policy on inflation in nigeria shetima. In the light of this, this study empirically investigates the impact of inflation and monetary policy on economic growth performance in nigeria with the use of. Estimating and forecasting the impact of in ation on economic. Monetary policy is one of the prime economic management tools that governments use to shape economic performance. Impact of interest rate on economic growth in nigeria. Thus this paper focuses on the use of monetary policy to check inflation in nigeria. The positive impact of these policy tools on economic performance will help the country achieve sustained growth and while reducing economic instability. Nigeria has over the years been controlling her economy through various. Annual time series data, sourced from central bank of nigeria cbn. Given the problems raised above, this study seeks to examine the impact of monetary policy on inflation control in nigeria. Jan 19, 2018 take a deeper look at how contemporary central banks attempt to target and control the level of inflation through monetary policy tools. The impact of monetary policy on economic growth in nigeria investigates the role monetary policy variable in stabilizing the economy of nigeria.
Impact of monetary policy on economic growth in nigeria. This has led to reduction in the standard of living of nigerians. Monetary policy increases liquidity to create economic growth. Besides, monetary policy is found to be more important in the dynamics of inflation compared to fiscal policy. Given the problems raised above, this study seeks to examine the impact of monetary policy on inflation control in nigeria from 1970 to 2010. H1 that the monetary policy instruments impact significantly on the general price level in nigeria. Pdf impact of inflation and monetary policy stabilization on. Babajide, isibor areghan akhanolu and okafor tochukwu. However, the impacts of this variable in the economic growth of nigeria have remained controversial acha et al. Impact of inflation and monetary policy stabilisation on. Doc the impact of monetary policy on inflation in nigeria.
The impact of monetary policy on indian economy during. Monetary policy instruments, target and goals 6 list of figures figure 1. The result of this study does not support the assertion that a tight monetary policy coupled with a contractionary fiscal policy. Pdf the impact of fiscal policy on inflation in nigeria. Inflation and reflect a dozen diverse views on one of the nations central economic problems. Although, inflation is a worldwide phenomenon, whose rate and effects, vary from country to country. In 1970, prices rose by about 14% immediately after the war of 1970 then fell to 3% in 1972, rose by about 16. Our emphasis here is on diagnosis of the causes of inflation and a description of the effects of inflation, not on specific policy recommendations to end inflation. The impact of monetary policy on nigeria economy 1980 2010 chapter one background of the study nigeria still presents a clear reflection of the third world economy in which the growing economy has some working machinery, monetary. A general overview of monetary policy and inflation in the nigerian economy is the foundation upon which the project is developed. Chuku 2010 used quarterly data to explore the monetary and fiscal policy interactions in nigeria. Inflation is a major problem facing nigeria as a country today.
Impact of monetary policy in nigeria on inflation, exchange. Time series data were collected from the central bank of nigeria cbn, the international monetary fund imf and the world bank. Central banks use interest rates, bank reserve requirements, and the amount of. The impact of monetary policy on nigeria economy 1980 2010.
The dynamics of monetary policy and inflation in nigeria. Nigeria inflation rate 19962020 data 20212022 forecast. Okoro 20 examined the impact monetary policy on nigeria economic. In order to test the impact of select monetary policy variables on inflation, ordinary least. Impact of monetary policy on industrial growth in nigeria. Inflation, economic growth, multiple regression model, monetary policy, nigeria. This pdf is a selection from an outofprint volume from the national. The impact of monetary policy on nigeria economy 1980 2010 chapter one background of the study nigeria still presents a clear reflection of the third world economy in which the growing economy has some working machinery, monetary and fiscal policies that are aimed at maintaining a balance in the entire economy so that growth and development, which is the ultimate goal of every economy, is. We recommended that for sustainable economic growth to be achieved in nigeria, the level of inflation should be stabilized by the monetary authorities. In the light of this, this study empirically investigates the impact of inflation and monetary policy on economic growth performance in nigeria with the use of econometric technique o l s method using time series data from cbn statistical bulletin from 19812008. In the light of this, this study empirically investigates the impact of inflation and monetary policy on economic growth performance in nigeria with the use of econometric technique o l s method using. The impact of fiscal and monetary policy on nigerian economic. Monetary policy and its effectiveness on economic development in nigeria author akinjare victoria, a. Fiscalmonetary policy and economic growth in nigeria.
The objective of this paper is to estimate the impact of monetary policy on inflation rates in. Monetary policy can be developed for encouraging investment and controlling inflation, while fiscal policy can be effective to reducing consumption of luxury and ostentation goods. Annual time series data, sourced from central bank of nigeria cbn statistical bulletins 19852012 were used to analyze and estimate the three multiple regression models drawn up, with the aid of software package for social sciences spss. The objective of this study was to investigate empirically the impact of monetary policy on nigeria s macroeconomic stability between 1970 and 2009. Nigeria is a monocultural economy, depending on oil as the mainstay of the economy and foreign exchange earner. Section 2 gives an overview of the monetary policy framework, inflation. In order to reduce the problem of stationarity usually associated with time series. The central bank of nigeria cbn, however, has made efforts to fight it using different policy measures, of which monetary policy is one of them. This study examined the impact of monetary policy on the growth of nigeria economy between the period of 1981 and 2012 with the objective of finding out the impact of various monetary policy instruments money supply, interest rate, exchange rate and liquidity ratio in enhancing economic growth of the country within the period considered.
The ordinary least square ols method was adopted because of its best linear. Inflation seemed to be the greatest task to governments policy. Estimating and forecasting the impact of in ation on economic growth in nigeria using threshold analysis okoroafor et al. Introduction inflation refers to the persistent and the continous rise in. In addition, the impact of monetary policy on growth in nigeria. For efficacy of policy, it is important to know the likely influence of. This project covers the role of monetary policy and its controlling inflation in the nigeria economy. The interest rate policy in nigeria for example, has changed within the time frame of regulated and deregulated regimes. The study empirically examines the impact of monetary policy on industrial growth in nigerian economy, in line with the objectives of this study, secondary data were obtained from central bank of nigeria. Monetary policy and inflation dynamics in ethiopia. Impact of monetary policy on inflation control in nigeria. Pdf the impact of monetary policy rate on inflation in nigeria charles eke academia. Sep 30, 2016 monetary policy can be developed for encouraging investment and controlling inflation, while fiscal policy can be effective to reducing consumption of luxury and ostentation goods. The growth of money supply is correlated with this high inflation episode because money growth.
The ordinary least square ols method was adopted because of its best linear unbiased estimator blue property. This will be achieved by comparing the impact of money growth with other major. Inflation is a serious macroeconomic problm that creates complications for economic measurement, and brings uncertainty when we try to look into the future. Monetary policy entails the government policies aimed at changing the quantity of money or credit condition for example, open market operation or changes in required reserved ration etc. Monetary policies involves changes in the quantity of money. In addition, the impact of monetary policy on growth in nigeria generated large vo.
Monetary policy cooperant factors do not have significant impact on economic growth in nigeria. Also, government, cbn, and other policy makers will benefit from this topic as it would provide a platform through which the various monetary policies will be explained in terms of how they suit the socialpolitical environment of nigeria. Monetary policy and inflation dynamics diva portal. Pdf the impact of monetary policy rate on inflation in. Therefore, this study, the determinants of inflation in nigeria, will be studied using monetary policy variables broad money supply, exchange rate, one year treasury bill rate and monetary policy rate. The natural log of the gdp was used as the dependent variables against the explanatory monetary policy variables. The effectiveness of monetary policy in the control of inflation in. The exchange rate movement has no significant effect. The paper examined the impact of monetary policy on economic growth in nigeria by developing a model that is able to investigate how monetary policy of the government has affected economic growth through the use of multivariable regression analysis. Monetary policy does not have a significant effect on inflation in. The impact of monetary policy on the economic growth of.
For a developing economy like nigeria, it is vital to analyze monetary policy transmission effect on inflation and money supply for several reasons, such as the determination of the appropriate channel and the effectiveness of monetary policy in managing inflation. Monetary policy refers to the combination of measures designed to regulate the value, supply and cost of money in an economy in consonance with the level of economic activities. Most studies that evaluated monetary policy effects. The impact of fiscal policy on inflation in nigeria.
Impact of monetary policy of economic growth in nigeria. The past 10 years have been characterized by an average growth rate of. Monetary policies involves changes in the quantity of money held by the public. Monetary policy transmission and industrial sector growth. Effect of monetary policy on inflation and money supply in. Take a deeper look at how contemporary central banks attempt to target and control the level of inflation through monetary policy tools. The result of this study does not support the assertion that a tight monetary policy coupled with a contractionary fiscal policy will engender natural rate of growth of the nigerian economy. Cusum test for monetary policy and inflation regression analysis inflation as a dependent variable. Monetary policy and inflation in nigeria economy project. The study investigated effect of monetary policy on economic growth in nigeria. Since the early 1970s, there has been more than three major episodes of high inflation in excess of 30 percent. Broad money supply has no major impact in bringing down the rate of inflation. Monetary policy cooperant factors have significant impact on economic growth in nigeria.
The rate of inflation in nigeria was about 10% between 1969 and 1970. The specific objectives of this study are to examine. A decade later, perspectives on the effectiveness of monetary policy had changed. Nwosa, agbeluyi and saibu 2011 established that there have been various regimes of monetary policy in nigeria some times, monetary policy is tight and at other times it is loose mostly used to stabilize. Monetary policy on economic growth in nigeria 19812016. Impact of monetary policy on inflationary process in nigeria. This work investigated the determinants of inflation in nigeria using a monthly data from january 2007 to august 2014.