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Rivers State University, Port Harcourt.
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| Title: | Effect of Money Supply on Real Gross Domestic Product in Nigeria: An Econometric Analysis |
| Author(s): | CHUKWU S. N., EWUBARE D. B. & MBONG P. C |
| Abstract: | This study examined the effect of money supply on Real gross domestic product in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical Bulletin from 1990-2023. Real gross domestic product was modeled as the function Narrow money supply(M1), broad money supply (M2) and extended broad money supply (M3). The null Hypotheses (H0) were tested at 0.05 level of significance, Ordinary Least Square (OLS), Augmented Dickey Fuller Test, Johansen Co-integration test, parsimonious vector error correction model and pair-wise causality tests were used to conduct the investigations and analysis. The findings revealed that 72.3 percent variation in real gross domestic product can be traced to money supply variables presented in the model while the independent variables proved that at first and second lag M1 has positive but no significant effect on real gross domestic product but M2 have negative effect on real gross domestic product while M3 have negative effect at lag 2 but negative effect at lag 1 and 2. The study concludes that money supply significantly affects economic performance. It recommends that Central Bank of Nigeria should maintain and enhance the policies on credit to private sector. The authorities should checkmate the level of money supply in correspondence with inflation to avoid crowding-out investment effect of inflation and the CBN should be made more effective in its monetary management by making all financial markets organized so as to accentuate the effects of monetary policy variables like Broad money supply. |
| Keywords: | Narrow Money supply, Broad Money Supply, Extended broad Money supply, Real GDP |
| Journal: | Journal of Economic Research and Development Studies Vol 2 No 1 |
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