Monetary Policy and Economic Growth: Empirical Evidence of Nigeria

Monetary Policy and Economic Growth: Empirical Evidence of Nigeria

Akpovofene Erhinyodavwe J., Kpolode, Oghenevwo P.
Department of Accountancy, Niger Delta University, Amasoma, Bayelsa State, Nigeria
DOI: https://doi.org/10.51244/IJRSI.2023.10714
Received: 24 June 2023; Revised: 05 July 2023; Accepted: 10 July 2023; Published: 09 August 2023

Abstract: The study employed secondary data covering from 2000 to 2022 to analyzed monetary policy and economic growth in Nigeria, our data were collected from Central bank of Nigeria statistical bulletin, while also considering variables such as money supply, inflation rate, interest rate and gross domestic product with the used of ordinary least square regression method, we discovered that all our variables a statistically significant except for interest rate, also there was positive relation among our variables. Therefore we recommended that, monetary regulators should always consider key macro-economic variables such as the ones used in this study before implementing critical policy; the citizen and the economy should also be consider when adopting monetary policy; policies makers should always strive to make policy that will make the economy be at economic advantage in order to strengthen our economic growth.

Keywords: Money supply, inflation rate, Interest Rate and GDP

I. Introduction

The stability of an economy is determined by the type of policy and decisions adopted, Nigeria is an exception to economic policy. Over the year’s different administration have adopted different type of policies with the intention to keep the economy running at its optimal level. All over the globe, policy makers/government strive to improve her economy, Boris, Paula and Volker (2015) economic policies determine the level of income individual will earn as well as how predictable their income and jobs are. The level of stability of earnings is very important for the well-being of the citizenry, this is because any wrong economic policy can result to retrenchment of people and cause unemployment problem in the society, while also distorting other economic variables such as inflation and interest rate. Uwazie and Aina (2015) opined that monetary policy decision over the years has been actions taken by the monetary authority to influence indirectly or directly, the amount of money and credit to the economy and the structure of interest rates so as to maintain the rate of economic growth, price stability and balance of payment equilibrium in the country (Nigeria).

Obayori, Nwogwugwu and Mozuawo (2016) it is a generally acknowledged truth among financial experts that money related and monetary strategies are vital devices that are utilized to impact macroeconomic execution as well as calibrate and guide an economy to accomplish the strategy objectives. Notwithstanding, an evaluation of performance in Nigeria as far as soundness in key macroeconomic objectives might be slippery. There is no perfect economy, hence Nigeria is not an exception, study and statistical data over the years has shown that Nigeria has implemented different economic and monetary policy, however there is still no improvement in our economic growth. Tragically, there has been practically no improvement in Nigeria as portrayed by some rising expansion, joblessness, import/export imbalance, wretchedness, hunger, and disintegrating foundation and personal satisfaction for the most part.

Economic policies have played a vital role in the achievements of recent impressive growth experienced by some developing counties, such recent growth patterns have bypassed important segments of the society (Philip, 2016). Despite the different economics policy adopted by different administration for decades now, inflation and interest has being on the surge and it is becoming worrisome. Recently the central bank of Nigeria introduce a policy to tame too much money in circulation with the intention of curbing inflation and other macro-economic variables, however due to the lack of proper implementation it lead to economic panic, hence introducing and adopting economic policy by the regulatory authority and those saddle with responsibility, proper consultation and implementation procedure should be well plan out, order to avoid wrong economic decisions that will not impact on the economy.