THE IMPACT OF MONETARY POLICY ON PRICE STABILITY IN NIGERIA


THE IMPACT OF MONETARY POLICY ON PRICE STABILITY IN NIGERIA


1AHMED ADESHINA BABATUNDE and 2IBITOYE VICTOR KEHINDE

1PRINCIPAL LECTURER, DEPARTMENT OF ACCOUNTANCY, LAGOS CITY POLYTECHNIC, IKEJA, LAGOS, NIGERIA
2DEPARTMENT OF ACCOUNTING, OLABISI ONABANJO UNIVERSITY, AGO-IWOYE, OGUN STATE, NIGERIA

Global journal of Economics and Business Administration


This study examines the impact of monetary policy on price stability in Nigeria from 1970 to 2014. The data obtained for the purpose of the study through Central Bank of Nigeria Statistical Bulletin were analysed using ordinary least square regression (OLS) model, unit root test and Johansen co-integration test. Consumer Price Index (CPI) is used as a proxy for general price level, which is the explained variable. Exchange rate and money supply were used as explanatory variables. The research also addressed various problems associated with monetary policies such as budget deficits, change in policy formulation, lack of enabling environment in the financial market and political instability. The result of the findings reveals that exchange rate and money supply actually influenced price stability in Nigeria both in the short-run and long-run. This is evidenced by 90% coefficient of determination and F-Statistics of 168.30 which is higher than the tabulated F-Statistics


Keywords: Monetary policy, Consumer Price Index, Money Supply, Exchange Rate, Debt Financing

Free Full-text PDF


How to cite this article:
BABATUNDE and KEHINDE. THE IMPACT OF MONETARY POLICY ON PRICE STABILITY IN NIGERIA. Global journal of Economics and Business Administration, 2016,1:2. DOI:10.28933/babatunde-and-kehinde-gjeba-201602


References:

1 Adesoye, A.B. (2012) Price, Money and Output in Nigeria: A Cointegration-Causality Analysis. African Journal of Scientific Research, 8 (1), 427-442.
2 Ajayi, I. (1999) Evolution and Functions of Central Banks: Central Bank of Nigeria Economic and Financial Review, 37(4), 11-27.
3 Ajisafe, R.A & Folorunso, B. (2002) The Relative Effectiveness of Fiscal and Monetary Policy in Macroeconomic Management in Nigeria. The African Economic & Business Review, 3 (1), 23-40.
4 Akinbobola, T. O (2012) The Dynamics of Money Supply, Exchange Rate & Inflation in Nigeria. Journal of Applied Finance & Banking, 2 (4), 117-141.
5 Chimobi, O.P. & Uche, U.C. (2010) Money, Price and Output. A Causality Test for Nigeria. American Journal of Scientific Research, 8, 78-87.
6 Chuku, C.A. (2009) Measuring the effects of Monetary Policy Innovations in Nigeria. African Journal of Accounting, Economics, Finance & Banking Research, 5 (5), 141-153.
7 Folawewo, A.O & Osinubi, T.S. (2008) Monetary Policy & Macroeconomic Instability in Nigeria: A Rational Expectation Approach. Journal of Social Sciences, 12 (2), 93-100.
8 Jhingan, M.L. (2004) Macroeconomic Theory, Delhi: Konark Publisher.
9 Nenbee, S.G & Madume, J. (2011) The Impact of Monetary Policy on Nigeria’s Macroeconomic Stability. International Journal of Economic Development Research & Investment, 2 (2), 174-183.
10 Olorunfemi, S. & Dotun, F. (2008) Stationarity Analysis of the Impact of Monetary Policy on Economic Performance in Nigeria. Pakistan Journal of Social Sciences, 5 (6), 562-566.
11 Onayemi, S. O. (2013) Price Stability Effect of Monetary Policy and Output Growth in Nigeria: A Time Series Analysis. Journal of African Macroeconomic Review, 4 (1), 1-18.
12 Onyiewu, C. (2012) Monetary Policy & Economic Growth of Nigeria. Journal of Economics & Sustainable Development, 3 (7), 62-70.
13 Sulaiman, L.A. (2015) An Empirical Analysis of Price Stability Effect of Nigerian Monetary Policy. Journal of Public & Municipal Finance, 4 (1), 1-6.