0704-883-0675     |      dataprojectng@gmail.com

THE IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA

  • Project Research
  • 1-5 Chapters
  • Abstract : Available
  • Table of Content: Available
  • Reference Style: APA
  • Recommended for : Student Researchers
  • NGN 5000

Abstract

This research work evaluates the responses of inflation, interest and exchange rate to shocks in Monetary Policy (captured by MPR) as well as the impacts of MPR on these Macroeconomic Variables. The study used monthly data spanning from December, 2006 (when the MPR was introduced) through February, 2012.  Following Joao and Andrea (2006), the research used Structural VAR to estimate the model. The result shows that inflation responds to shocks in MPR only in a fairly unstable manner (a pattern that is almost unpredictable); in the first four periods, positive shocks in MPR could not bring down inflation but thereafter, any further increase in MPR produced gradually declining but positive rate of interest. On the other hand, exchange rate responds to shocks in MPR in a relatively downward fashion and quickly assumes upward trend from the second period lasting throughout the period, while interest rate, responds quickly and positively to shocks in MPR from the first thorough the last period.

Therefore, interest and exchange rates are more responsive to shocks in MPR than inflation and above all sometimes changes in MPR cannot guarantee the expected changes in Inflation (because of large informal sector as well as policy divergence between the monetary and fiscal authorities among other reasons). Hence, of all the three variables, inflation is the most difficult to deal with and stability of which is a necessary condition for the achievement of stability in the other two variables (interest & exchange rates). More so, interest and exchange rates as well as MPC meetings are better predictors of MPR (because of their high sensitivity to it) than the rate of inflation. The result also uncovered that as the most difficult enemy of the economy, inflation cannot be effectively and efficiently conquered with the variation in MPR alone, other instruments particularly Cash Reserve Requirement (CRR) and especially Open Market Operations (OMO) should be prudently used to compliment the efficacy of MPR. Consequently, the paper further recommends the current monetary tightening stance of CBN but should be used with caution, improvement and expansion of the cash-lite policy and non-interest banking of the CBN, infrastructural development, harmonization of fiscal and monetary policy as well as the reduction in the number of MPC meetings to at most quarterly unless in case of emergency.




FIND OTHER RELATED TOPICS


Related Project Materials

EFFECTIVE COMMUNICATION IN ENHANCING PRODUCTIVITY IN NIGERIAN UNIVERSITIES

Background of the study

There is a general saying that “there is no smoke without fire,” th...

Read more
Exploring the Effectiveness of AI Chatbots in University Student Services: A Case Study of Federal University of Technology, Minna (Bosso LGA, Niger State)

Background of the Study
Artificial Intelligence (AI) has transformed various sectors, with higher education institutions in...

Read more
AN ASSESSMENT OF THE HATE SPEECH BILL AND THE FIGHT AGAINST MISINFORMATION ON SOCIAL MEDIA

BACKGROUND OF THE STUDY

Man has naturally expressed a desire to express himself in things concerning his general well-be...

Read more
ANTIHYPERGLYCAEMIC AND ANTIBACTERIAL EVALUATION OF METHANOL TUBER EXTRACT OF CHLOROPHYTUM ALISMIFOLIUM BAKER (LILIACEAE)

ABSTRACT

Diabetes mellitus is a metabolic disorder which affects about 346 million people globally. Synthetic antidiabetic agents are exp...

Read more
THE EFFECT OF NEW PRODUCT DEVELOPMENT AS A STRATEGY FOR CORPORATE GROWTH IN UNILEVER LIMITED

 Abstract

This study is on the effect of new product development as a strategy for corporate growth in Unilever Lim...

Read more
Optimization of Quantum Cryptography for Preventing Cyber Attacks in the Banking Sector at United Bank for Africa (UBA), Abuja

Background of the Study

Cybersecurity is a critical concern for financial institutions globally, especially as the sophi...

Read more
THE EFFECTS OF EARLY CHILDHOOD EDUCATION ON TECHNOLOGICAL LITERACY

 ABSTRACT: The effects of early childhood education on technological...

Read more
An Appraisal of the Role of Trade Fairs in Small Business Networking: A Study of Entrepreneurs in Benue State

Background of the Study
Trade fairs play a crucial role in facilitating business networking and promoting the visibility of...

Read more
A Study on the personal factors Influencing Nigerian Consumer Buying Behavior

ABSTRACT

As seller are making efforts to understand the buying behavior of consumers, which will help their business make more profit, in...

Read more
INFLUENCE OF CARTOON ON NEWS PAPER READERSHIP AMONG STUDENT; A STUDY OF UNIVERSITY OF LAGOS, AKOKA

Background of the study

There is no denying the potency and velocity of the media as a means of communication. In additi...

Read more
Share this page with your friends




whatsapp