Nexus on the Responsiveness of Nigeria Economy to Monetary Policy (1986-2018)

Abstract

The study investigated the nexus on the responsiveness of Nigeria economy to monetary policy from 1986-2018. The study employed the Ordinary Least Square method for the estimation. The study tested for descriptive statistics, tested for unit root where real gross domestic product and exchange rate are integrated of I(2), money supply, monetary policy, inflation, liquidity ratio and external reserve are integrated of order I(1) and interest rate is integrated of order I(0). The study also used the Johansen co-integration test to confirm the long run relationship among the variables. The result of the study reveals that monetary policy has a positive impact on economic growth In Nigeria. The study concluded and recommended that there is need to reduce the excessive government expenditure in line with the objectives of monetary policy of the government. Again, monetary policy measures should be well co-ordinated so that the desired behavioural changes in the real sector will be achieved