Money, Output and Price Level in Nigeria: A Test of the Monetary Neutrality Proposition

Abstract

This paper presents and tests a model to determine either or both how anticipated or unanticipated money affects real output and inflation in Nigeria. The Barro two –step estimation procedure was explored. Also, the effects of devaluation and business cycles in the industrialized countries on output fluctuation in Nigeria were pursued. The evidence reveals that while anticipated money affects real output, the unanticipated money did not. Thus, the tests contract the policy ineffectiveness proposition. Also, cyclical movements in the output of industrialized countries negatively affect real output with spread effect; and devaluation exhibits a delayed positive impact on output performance, with greater effect on inflation.


(Af. J. of Finance and Management: 2003 11(2): 110-120)