EFFECTS OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA
Augustine Okon Jacob, Okon Joseph Umoh, Ayara Kingdom Akpan
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Despite the various monetary regimes that have been adopted by the Central Bank of Nigeria over the years, inflation remains a major threat to Nigeria’s economic growth. This study seeks to examine the relationship between monetary policy and economic growth in Nigeria. Starting from the nature and direction of causation, the Granger pair-wise causality model was used, while a multiple regression model was formulated based on the theoretical background of the study. The error correction mechanism (ECM) method was used to estimate the equation, to evaluate the inherent connectivity between monetary policy and economic growth and also the impact of money supply, interest rate, and exchange rate on the rate of economic growth in Nigeria. The result showed that there is a unidirectional causal relationship between money supply and economic growth in Nigeria. Secondly, interest rates and exchange rates have a negative effect on economic growth, while money supply has a positive effect on economic growth. As a result, the macroeconomic variables that policymakers should regulate in order to reduce inflation and ensure economic growth in Nigeria are the money supply, exchange rate, and interest rate.