The impact of Monetary Policy on the economic growth of Nigeria

Abstract

This work examined the extent to which the Central Bank of Nigeria Monetary Policies could effectively be used to promote economic growth, covering the period of 1990-2011. The influence of money supply, average price, interest rate and labour force were tested on Gross Domestic Product using the multiple regression models as the main statistical tool of analysis. Studies show that CBN Monetary Policy measures are effective in regulating both the monetary and real sector aggregates such as employment, prices, level of output and the rate of economic growth. Empirical findings from this study indicate that average price and labour force have significant influence on Gross Domestic Product while money supply was not significant. Interest rate was negative and statistically significant. It is therefore, recommended that Central Bank Monetary Policy could be an effective tool to encourage investment, reduce unemployment, reduce lending rate and stabilize the economy of Nigeria.