IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH IN NIGERIA: 2000-2023
Ali Abubakar, PhD, Sunday Emmanuel Ologunla, PhD and Jonathan Oniore, PhD
Volume 11 Issue 1
Abstract
Monetary policy is a critical tool for managing economic growth, especially in developing countries like Nigeria. Despite varying perspectives on its effectiveness, it's evident that monetary policy significantly impacts key economic indicators, such as inflation, interest rates, and exchange rates. This study focuses on evaluatinghow different monetary policies have influenced Nigeria's economic growth from 2000 to 2023. The study reviews several research findings, including the effectiveness of forward guidance in Sweden, the impact of monetary policy on FDI in Nigeria, and the role of monetary policy in managing external shocks. These studies highlight the varying impacts of monetary policy across different economic contexts. The study is anchored on economic growth theories that emphasize the role of monetary policy in influencing economic indicators like GDP. Theories such as Keynesian economics, which stress the importance of government intervention in stabilizing the economy, provide a basis for analyzing the data. he study employs an ex-post facto research design using secondary data from 2000 to 2023. The data was sourced from the CBN Statistical Bulletin and the National Bureau of Statistics (NBS). Multiple regression analysis was used to estimate the impact of monetary policy variables such as interest rates, exchange rates, and money supply on Nigeria's GDP. The study concludes that while monetary policy has a significant impact on Nigeria's economic growth, its effectiveness is often hampered by external factors like oil price fluctuations and exchange rate volatility. The study recommends that the Central Bank focus on maintaining stable monetary policies and improving communication strategies to enhance policy predictability and effectiveness. Keywords: Exchange Rate, Inflation, Interest Rate, Monetary Policy, Money Supply
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