Impact of Monetary Policy on Poverty Reduction in Nigeria

Abstract

This study examines the impact of monetary policy on poverty reduction in Nigeria between 1985 and 2019, taking into account other factors that influenced poverty. The institutional quality factors were included as part of independent variables to bridge the gap between monetary policy and poverty reduction in Nigeria. The study used Error Correction Model (ECM) technique for the estimation, and the results show that there exists a strong link between monetary policy and poverty reduction. The findings also reveal that institutional quality, proxy by political and economic institutions, is among the major factors that influence poverty in Nigeria. The study concludes that monetary authority should implement low inflationary monetary policy that will not only encourage investment, raise employment opportunities and economic growth, but also improves wellbeing of the people in the country.