THE EFFECT OF MONEY SUPPLY AND INTEREST RATE ON NIGERIA’S ECONOMIC GROWTH
Atamenwan, Julius, PhD and Nestor, Bossou Comla
Volume 6 Issue 1
Abstract
The aim of every independent nation is to achieve economic growth as it is a necessity to development. Therefore, the study investigates the impact of money supply and interest rate on economic growth in Nigeria spanning the period of 1991 to 2023 using Autoregressive Distributed Lag (ARDL) Bound Test approach. The dependent variable is real Gross Domestic Product growth rate (RGPR) while, the explanatory variables are monetary policy rate (MPR), Prime lending rate (PLR), and money supply (MS2). The result shows that there is no long run relationship among the variables employed. Also, monetary policy rate, Prime lending rate, and money supply have no significant impact on economic growth in Nigeria The study therefore recommends among others that, government should not pay all her attention only on monetary instruments as major tools toward the achievement of economic growth, as such government should diversify and encourage capital investments in productive sectors of the economy such as agriculture, education, transport, power, health etc, that can translate to economic growth by increasing economic activities and labour skills. Keywords: Money Supply, Interest Rate, Real Gross Domestic Product Growth Rate.
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