Impact of Money Supply on the Growth of the Nigerian Economy, 1976 – 2015
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2019, Vol 10, Issue 1
Abstract
Economic growth is one of the important macro-economic objectives of Nigeria and this study examines the impact of money supply on the growth of the Nigerian economy. The research was anchored on theclassical quantity theory, Keynesian theory and the Monetarist theory that provided justifications for the conceptual and empirical discussion. This research employed ex-post facto design. It adopted the neo-classical production model and applied econometrics techniques to time series data. All estimations were performed with econometrical software called EVIEWS version 9.0. Empirically, the result showed that money supply is not significant in the short-run. In the long-run money supply is significant but has a negative impact on economic growth. The causality test showed that money and economic growth are independent of each other, meaning that there is no predictive power of money supply in explaining the economic growth and vice versa. Thus, increment in money supply is incapable of generating growth in the Nigerian economy. The implication is that government should not pay so much attention on money supply as a major tool of monetary policy towards the achievement of economic growth.Also in the estimated results investment (GFCF) is significant in long-run and not in the short-run, this is expected because capital accumulation takes time to yield returns. However, labour is significant in the long-run and in short-run thus government should encourage capital investments in productive sectors of the economy such as agriculture, education (which will help to enhance the quality of labour), transport, power, health etc.
Authors and Affiliations
Odumusor Charles Joseph
Keywords
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- EP ID EP443089
- DOI 10.9790/5933-1001023046.
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