An Evaluation of Monetary Policy and Economic Growth in Nigeria (2000 – 2017)

Abstract

The study set to investigate the relationship between monetary policy and economic growth in Nigeria. The scope of the study
covers the span of 18 years from 2000-2017. The study uses the GDP as proxy for economic growth and serves as the dependent
variable. Other variables such as the interest rate, open market operations, exchange rate, and monetary policy rate and cash
reserve ratio were used as the explanatory variables respectively. The study used the time series data of the variables in question
and adopted the ordinary least square technique; it also conducted the ADF unit root test for stationary as well as the error
correction mechanism for co-integration tests. The study showed that, there is a long run relationship between monetary policy
and economic growth. The study found out that, interest rate, open market operations, and exchange rate have positive impact on the GDP, on the other hand monetary policy rate and cash reserve ratio have inverse relationship with the GDP. Hence the study recommends government appropriate policy action on the relevant variables as it concerns the set goals and objectives.