EFFECT OF MONETARY POLICY ON SELECTED MACROECONOMIC VARIABLES IN NIGERIA

Authors

  • Mary Nkechinyere Onwudiegwu Department of Banking and Finance, Nnamdi Azikiwe University, Nigeria
  • Nonso John Okoye Department of Banking and Finance, Nnamdi Azikiwe University, Nigeria
  • Hillary Chijindu Ezeaku Department of Banking and Finance, Caritas University, Enugu, Nigeria
  • Nnamdi Lawrence Okeke Department of Marketing, Nnamdi Azikiwe University, Nigeria

DOI:

https://doi.org/10.51594/ijae.v5i3.455

Abstract

This study analyzed the effects of monetary policy on selected macroeconomic variables in Nigeria from 1986 to 2019. The relationship between monetary policy and macroeconomic variables in Nigeria has been a contentious issue due to inconsistent implementation and empirical findings. The study specifically evaluated the impact of monetary policy rate, cash reserve ratio, liquidity ratio, and money supply, as independent variables, on inflation and employment rate, the dependent variables. The study design was ex-post facto and utilized the Error Correction Mechanism (ECM) Model for estimation. The analysis revealed a negative and insignificant relationship between the monetary policy instruments and the selected macroeconomic variables. The conclusion was that the Central Bank of Nigeria's monetary policy adjustments have not effectively improved macroeconomic conditions in Nigeria. The study recommended increasing awareness of financial inclusion in rural areas, promoting collaboration between monetary and fiscal policy managers, and directing efforts towards enhancing the development of both the money and capital markets.

Keywords: Monetary Policy, Macroeconomic Variables, Nigeria.

Published

2023-03-21

Issue

Vol. 5 No. 3 (2023)

Section

Articles

Copyright (c) 2023 Mary Nkechinyere Onwudiegwu, Nonso John Okoye, Hillary Chijindu Ezeaku, Nnamdi Lawrence Okeke

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