EFFECTS OF MONETARY POLICY ON HOUSEHOLD CONSUMPTION EXPENDITURE IN NIGERIA
James Essien Akpan, PhD and Brown, Uduakobong Akpanabba, PhD
Volume 4 Issue 1
Abstract
The study examines the impact of monetary policy on household consumption expenditure within the Nigerian context using data spanning the period 1981-2019Household consumption expenditure was regressed against interest rate (INT), exchange rate (EXCHR), broad money supply (BMS2), and monetary policy rate (MPR). Data was sourced from the annual publication of the Central Bank of Nigeria for 2019. The work deployed ordinary least squares (OLS) as its major analytical technique. The result showed that an increase in broad money supply values over the period led to a corresponding rise in household consumption expenditure. Conversely, exchange rate showed a negative relationship with household consumption expenditure, and interest rate exhibited a negative effect, predicting a 4.24% decrease in household consumption expenditure over time with an increase in interest rate values. The study recommends an increase in the quantity of broad money in circulation, setting a moderate exchange rate by the government through the Central Bank of Nigeria to stimulate household consumption expenditures, an ensuring effective management of interest rate volatility by monetary authorities in Nigeria. The study concludes that monetary policies remain integral to the economic backbone, influencing household welfare performance in the nation. Key words: Household Consumption, Expenditure, Interest Rate, Exchange Rate, Broad Money Supply, Monetary Policy Rate
Download Paper