EFFECT OF MONETARY POLICY ON PRICE STABILIZATION IN NIGERIA 1981 – 2021

https://doi.org/10.5281/zenodo.10178251

Authors

  • Eze, Amoge Emilia Department Of Economics, Faculty of Management and Social Sciences, School of Postgraduate Studies, Godfrey Okoye University, Ugwuomu-Nike, Enugu
  • Prof. Agu C.C. Department Of Economics, Faculty of Management and Social Sciences, School of Postgraduate Studies, Godfrey Okoye University, Ugwuomu-Nike, Enugu

Keywords:

Monetary Policy, Price Stabilization, Inflation, Consumer Price Index, Nigeria Economy

Abstract

This study examined the effect of monetary policy on price stabilization in Nigeria during the period 1981-2021. Data for the study were extracted from the Central Bank of Nigeria (CBN) statistical bulletin and world development index (WDI) 2021. The method of data analysis used is linear regression method with application of Error Correction Model (ECM). The major findings of the study reveal that liquidity ratio has negative and non-significant effect on price stabilization in Nigeria. Cash reserve ratio has a positive but non-significant effect on price stabilization in Nigeria. Monetary policy rate has a positive but non-significant effect on price stabilization in Nigeria. Finally, there exists no causal relationship amongst the variables under investigation. It is therefore the recommendation of the study that to maintain a relatively stable economy, monetary authorities should increase their liquid assets over liabilities so that it will be significant to stabilize price in the Nigerian economy. Secondly, that the Central Bank of Nigeria should modify their regulations to deposit money banks to make sure that they don’t keep more than the required cash for creation of money. Thirdly, that the Central Bank of Nigeria needs to reduce monetary policy rate and enforce deposit money banks to charge different interest rates for borrowing purposes. This will relatively make monetary policy rate significant in the Nigerian economy.  Finally, the study recommends that government needs to evaluate these monetary policy instruments so that they can be engaged optimally

Published

2023-11-21

How to Cite

Eze, A. E., & Agu , C. (2023). EFFECT OF MONETARY POLICY ON PRICE STABILIZATION IN NIGERIA 1981 – 2021. SADI Journal of Economics and Social Sciences (SJESS), 10(4), 1–13. https://doi.org/10.5281/zenodo.10178251

Issue

Vol. 10 No. 4 (2023): October-December

Section

Original Peer Review Articles
Copyright & Licensing

Copyright (c) 2023 SADI Journal of Economics and Social Sciences (SJESS)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

References

Ajayi, S.I. (2012). An econometric case study of the relative importance of monetary and fiscal policy in Nigeria. Bangladesh Economic Review, 2(2). 559-576.

Ajisafe, J.O. & Folorunsho, A. (2012). The relative effectiveness of monetary and fiscal policies in Nigeria between 1970 and 1999. Journal of Economic Management, 5(20).18-21.

Asogu, J.O. (2008). An Econometric analysis of the relative potency of monetary and fiscal policy in Nigeria. CBN Economic and Financial Review, 36 (2). 32-48.

Berlmann, M., Nelson, F. D. (2013), Annals of Economics and Finance, 14(2). 363-390.

CBN, (2005). Living standards and poverty reduction. Annual Report and Statement of Accounts for the year Ended 31 st Dec. pp.76

CBN, (2006). Living standards and poverty reduction. Annual Report and Statement of Accounts for the year Ended 31 st Dec. pp.89

CBN, (2011). What is monetary policy? Understanding monetary policy series No. 1.39-40.

Kavila, W., & Le Roux, P. (2017). The role of monetary policy in Zimbabwe's hyperinflation episode. African Review of Economics and Finance, 9(2), 131-166.

Kumapayi, A. A., Nana, J. U., and Ohwofasa, B. O. (2012). Impact of inflation on monetary

Oni, B. (2006). Employment generation: Theoretical and empirical issues. In NES: Employment generation in Nigeria. Selected papers presented at the 200 annual conference of the Nigerian Economic Society (NES), Calabar, 22nd _24th August. 18- 19.

Onwachukwu, C. I. (2014). Impact of Monetary Policy on Inflation Control in Nigeria (No. 67087). University Library of Munich, Germany.

Policy and economic development in Nigerian. Evidence from empirical data. Asian Journal of Empirical Research, 2(2), 28-39.

Tsenkwo, J.B. & Londuut, T.D. (2012). Does private sector deficit financing crowd – out private sector investment in Nigeria? Evidence from VAR analysis. Jos Journal of Economics, 5(1).126 – 127.

Uddin, M. N., Uddin, M. J., & Ahmmed, M. (2019). Money and Inflation Nexus in Bangladesh. Asian Economic and Financial Review, 9(6), 702-711.

Ujuju, L. E., & Etale, L. M. (2016). Macroeconomic analysis of the relationship between monetary policy instruments and inflation in Nigeria. International Journal of Business and Management Review, 4(6), 31-39.