The Effects of Monetary Policies on Economic Growth in Nigeria

Abstract

The study investigated the effects of monetary and fiscal policies on economic growth in Nigeria using various economic variables. The findings showed that gross capital formation, total number of employees, broad money supply, and lending interest rate are significant factors in determining economic growth in Nigeria. The study found that gross capital formation, total number of employees, and broad money supply have a positive and significant effect on gross domestic product (GDP), while lending interest rate has a negative and significant effect on GDP. The study recommended that the government should encourage more private investment in Nigeria by lowering the lending interest rate, which would lead to more borrowing by private investors and boost investment in the country. The study also recommended that government policies should be tailored towards creating more employment in Nigeria as this can lead to economic growth. Finally, the study concluded that monetary policy is more effective than fiscal policy in Nigeria, and the monetary authority should be sensitive in directing its policies to the sector that can propel economic growth. The study suggests that the monetary authority could use an expansionary monetary policy to reduce interest rates and encourage more investment, which would stimulate economic growth in Nigeria.