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Rivers State University, Port Harcourt.
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| Title: | Effects of Monetary Policy on Economic Growth in Nigeria |
| Author(s): | Christian Gbarawae NWIKINA, Samuel BIIRA & Sunny Nwonodi AMADI |
| Abstract: | This study investigates the effect of monetary policy on economic growth in Nigeria for the period; (1981-2022). The formulated model was subjected to unit root test using the Augumented Dickey Fuller unit root test approach. The data was collected from Central Bank of Nigeria (CBN) statistical bulletin and national bureau of statistics. The dependent variable is Real Gross Domestic Product (RGDP) while the independent variables are Money Supply (MS), Lending Rate (LR), Deposit Rate (DR) and Exchange Rate (EXR). The outcome of the ADF result showed that the variables were not stationary at levels I(0), but became stationary after first difference integrated at order I (1). As a consequence, the study adopted the Johansen co –integration method to ascertain long-run relationship between the variables while the vector error correction mechanism was used to determine the behaviour of the variables as well as the speed of adjustment. The study found that exchange rate (EXR), and broad money supply (MS) are negative but significant to influence economic growth in the long-run while lending rate (LR) is negative but significant to influence economic growth in the short-run. However, deposit rate (DR) showed a positive and insignificant relationship with economic growth both in the long-run and current period of the short-run. It was recommended amongst others that the Central Bank of Nigeria (CBN) should increase the deposit rate as a means of mobilizing fund for investment. |
| Keywords: | Lending Rate, Exchange Rate, Broad Money Supply, Economic Growth |
| Journal: | Journal of Contemporary Research in Economics and Development Studies (JCREDS) |
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