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Does Monetary Policy Influence Economic Growth in Nigeria?

Author

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  • Ismail O. FASANYA

    (Department of Economics, University of Ibadan, Ibadan, Nigeria)

  • Adegbemi B.O ONAKOYA

    (Department of Economics, Tai Solarin University of Education, Ijagun, Nigeria)

  • Mariam A. AGBOLUAJE

    (Department of Economics and Financial Studies, Fountain University, Osogbo, Osun State, Nigeria)

Abstract

This study examines the impact of monetary policy on economic growth in Nigeria.The study uses time-series data covering the range of 1975 to 2010.The effects of stochastic shocks of each of the endogenous variables are explored using Error Correction Model (ECM). The study shows that Long run relationship exists among the variables. Also, the core finding of this study shows that inflation rate, exchange rate and external reserve are significant monetary policy instruments that drive growth in Nigeria .It is therefore recommended that the establishment of primary and secondary government bond markets that can also increase the efficiency of monetary policy and reduce the government’s need to rely on the central bank for direct financing.

Suggested Citation

  • Ismail O. FASANYA & Adegbemi B.O ONAKOYA & Mariam A. AGBOLUAJE, 2013. "Does Monetary Policy Influence Economic Growth in Nigeria?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(5), pages 635-646, May.
  • Handle: RePEc:asi:aeafrj:2013:p:635-646
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    References listed on IDEAS

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    11. Balogun, Emmanuel Dele, 2007. "Monetary policy and economic performance of West African Monetary Zone Countries," MPRA Paper 4308, University Library of Munich, Germany.
    12. Feridun, M., & Folawewo, A. O. & Osinubi, T.S ., 2005. "Monetary Policy and Macroeconomic Instability in Nigeria: A Rational Expectation Approach," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 5(2).
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    Cited by:

    1. repec:rss:jnljef:v3i2p3 is not listed on IDEAS
    2. repec:ibn:ijefaa:v:9:y:2017:i:11:p:194-206 is not listed on IDEAS
    3. Kalu E. Uma & Benson M. Ogbonna & Paul Obidike, 2014. "Monetary Policy Transmission Mechanism In Nigeria: An Overview," Proceedings of International Academic Conferences 0702180, International Institute of Social and Economic Sciences.
    4. Nyorekwa, Enock Twinoburyo & Odhiambo, Nicholas Mbaya, 2016. "Can monetary policy drive economic growth? Empirical evidence from Tanzania," Working Papers 21122, University of South Africa, Department of Economics.
    5. srithilat, khaysy & Sun, Gang, 2017. "The Impact of Monetary Policy on Economic Development: Evidence from Lao PDR," MPRA Paper 79369, University Library of Munich, Germany, revised 27 Apr 2017.
    6. Nyorekwa, Enock Twinoburyo & Odhiambo, Nicholas Mbaya, 2016. "Monetary policy and economic growth in Kenya:The role of money supply and interest rates," Working Papers 20712, University of South Africa, Department of Economics.

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