RESEARCH JOURNAL OF BUSINESS AND ECONOMIC MANAGEMENT
Integrity Research Journals
ISSN: 2756-6676
Model: Open Access/Peer Reviewed
DOI: 10.31248/RJBEM
Start Year: 2017
Email: rjbem@integrityresjournals.org
The monetary policy and price stability nexus: The Nigerian case (1981-2016)
https://doi.org/10.31248/RJBEM2019.039 | Article Number: 9475B16F2 | Vol.3 (1) - February 2020
Received Date: 31 December 2019 | Accepted Date: 08 February 2020 | Published Date: 28 February 2020
Authors: Oladosu Deborah and Oladele Seun*
Keywords: consumer price index, gross domestic product, exchange rates, interest rates, monetary policy, money supply, open market operations, price stability.
The study evaluated the effects of monetary policy on price stability in Nigeria for the period 1981-2016. The consumer price index was used as the dependent variable while money supply, interest rate, exchange rate, Gross Domestic Product (GDP) and treasury bill rates were the independent variables. The research made use of secondary data obtained from Central Bank of Nigeria Statistical Bulletin and World Bank Development Indicators. The study employed Auto Regressive Distributive Lag (ARDL). The unit root test showed that all the time series data were not stationary series. The result showed in the short-run and long-run, exchange rate, money supply, GDP and open market operations have significant effects on price stability in Nigeria while interest rate is significant only in the short-run. Based on the findings, the study recommended among others, that Central Bank of Nigeria increase interest rates during inflation in order to control money supply and consequently inflation. Government should take policy actions swiftly so as to reduce lag problems. Also, monetary policy alone cannot be used to maintain price stability. It should, therefore, be supplemented by fiscal measures, non-monetary and non-fiscal measures.
| Adeleke, O., Sikiru, O. A., & Akinola, M. (2013). Monetary policy and Nigeria's economic growth. IOSR Journal of Economics and Finance, 1(3), 56-63. Crossref |
||||
| Adeoye, B. W., & Saibu, O. M. (2014). Monetary policy shocks and exchange rate volatility in Nigeria. Asian Economic and Financial Review, 4(4), 544-562. | ||||
| Adesoye, A. B., Maku, O. E., & Atanda, A. A. (2012). Is Monetary Policy a Growth Stimulant in Nigeria? A Vector Autoregressive Approach (No. Paper No. 35844). Link |
||||
| Akinbobola, T. O. (2012). The Dynamics of money supply, exchange rate and inflation in Nigeria. Journal of Applied Finance and Banking, 2(4), 117-141. | ||||
| Anowor, O. F., & Okorie, G. C. (2016). A reassessment of the impact of monetary policy on economic growth: Study of Nigeria. International Journal of Developing and Emerging Economies, 4(1), 82-90. | ||||
| Babajide, A. (2011). The relationship between the informal and formal financial sector in Nigeria: A case study of selected groups in Lagos metropolis. International Journal of Research in Computer Application and Management, 1(10), 24-32. | ||||
| Babatunde, A. A., & Kehinde, I. V. (2016). The impact of monetary policy on price stability in Nigeria. Global Journal of Economics and Business Administration, 1(2), 14-26. | ||||
| Balami, D. H., Ahmed, F. F., & Yusuf, A. B. (2016). Impact of monetary policy in nigeria on inflation, exchange rate and economic growth. IIARD International Journal of Economics and Business Management, 2(5), 67-82. | ||||
| Batini, N. (2004). Achieving and Maintaining Price Stability in Nigeria (No. WP/04/97). Crossref |
||||
| Cecchetti, S. G., Wynne, M. A., Gali, J., & Propper, C. (2003). Inflation measurement and the ECB's pursuit of price stability: A first assessment. Economic Policy, 18(37), 395-434. Crossref |
||||
| Central Bank of Nigeria (2011). Understanding monetary policy (Series No. 2). Nigeria. | ||||
| Chimobi, O. P., & Uche, U. C. (2010). Money, price and output: A casualty test for Nigeria. American Journal of Scientific Research, 8(4), 78-87. | ||||
| Dankwa, I. O., & Adoley, A. N. (2014). The impact of money lending institutions on small and medium enterprises: A case study of Shalom Lending Enterprise. Global Journal of Management and Business Research: Finance, 14(5), 67-76. | ||||
| Emerenini, F., & Eke, C. N. (2014). The impact of monetary policy rate on inflation in Nigeria. Journal of Economics and Sustainable Development, 5(28), 146-154. | ||||
| Ezeaku, H. C., Ibe, I. G., Ugwuanyi, U. B., Modebe, N. J., & Agbaeze, E. K. (2018). Monetary policy transmission and industrial sector growth: Empirical evidence from Nigeria. Sage Open, 8(2), 1-12. Crossref |
||||
| Fasanya, I. O., Onakoya, A. B. O., & Agboluaje, M. A. (2013). Does Monetary Policy Influence Economic Growth in Nigeria? Asian Economic and Financial Review, 3(5), 635-646. | ||||
| Feridun, M., Folawewo, A., & Osinubi, T. (2005). Monetary Policy and Macroeconomic Instability in Nigeria: A Rational Expectation Approach. Applied Econometrics and International Development, 5(2), 69-90. | ||||
| Forkuoh, S. K., Li, Y., Affum-osei, E., & Quaye, I. (2015). Informal financial services: A panacea for SMEs financing? A case study of SMEs in the Ashanti Region of Ghana. American Journal of Industrial and Business Management, 5(1), 779-793. Crossref |
||||
| Goodfriend, M., & King, R. G. (2001). The Case for Price Stability (Series No. 01-02). Crossref |
||||
| Hassan, M. O. (2012). Monetary Policy Management Implications on the Movement of Agricultural Prices in Nigeria. African Journal of Business Management, 6(46), 11401-11410. Crossref |
||||
| Ikechukwu, A., Itoro, I., & Christiana, N. (2016). The efficacy of nigeria monetary policy: A comparative analysis. Scholedge International Journal of Business Policy and Governance, 3(4), 51-52. Crossref |
||||
| Irungu, W., Chevallier, J., & Ndiritu, S. W. (2019). Investigating fiscal and monetary policies coordination and public debt in Kenya: evidence from regime-switching and self-exciting threshold autoregressive models (Economics Discussion Paper No. 2019-40), Kiel Institute for the World Economy. Link |
||||
| Itodo, I., Akadiri, S. S., & Ekundayo, M. R. (2017). Monetary Policy and Price Stability in Nigeria. Academic Journal of Economic Studies, 3(2), 68-75. | ||||
| Kalu, J. U., Gyang, Z. Z., Aliagha, G. U., Alias, B., & Joachim, O. I. (2015). Monetary policy and its price stabilization effects on the prices of building materials. Medditerranean Journal of Social Sciences, 6(4), 171-177. Crossref |
||||
| Nasko, A. M. (2016). Impact of monetary policy on the economy of Nigeria. Pyrex Journal of Business and Finance Managemnet Research, 2(10), 163-179. | ||||
| Nnenna, M., & Ihemeje, J. C. (2016). The Impact of Monetary Policy on the Economic Growth of Nigeria. African Research Review: An International Multi-Disciplinary Journal, Ethiopia, 10(3), 192-206. Crossref |
||||
| Nwosa, P. I., & Oseni, I. O. (2012). Monetary policy, exchange rate and inflation rate in Nigeria: a co-integration and multi-variate vector error correction model approach. Research Journal of Finance and Accounting, 3(3), 62-70. | ||||
| Okafor, C., Oshoke, A. S., & Thomas, A. S. (2015). Monetary policy innovations and growth rate of output in Nigeria. IIARD International Journal of Economics and Business Management, 1(8), 80-94. | ||||
| Okwo, I. M., Eze, F., & Nwoha, C. (2012). Evaluation of monetary policy outcomes and its effect on price stability in Nigeria. Research Journal of Finance and Accounting, 3(11), 37-48. | ||||
| Onakoya, A. B., Ogundajo, G. O., & Johnson, B. S. (2017). Monetary policy and the sustainability of the manufacturing sector in Nigeria. Review of Innovation and Competitiveness, 3(4), 71-88. Crossref |
||||
| Onalo, U., Lizam, M., & Kaseri, A. (2016). Government expenditure and the economy: The Nigeria perspective. Archives of Current Research International, 4(1), 1-12. Crossref |
||||
| Onayemi, S. O. (2013). Price stability effect of monetary policy and output growth in Nigeria: A time series analysis. Journal of African Macroeconomic Review, 4(1), 247-263. | ||||
| Orphandies, A. (2006). The road to price stability. Washington D C: Divisions of Research and Statistics and Monetary Affairs, Federal Reserve Board. Crossref |
||||
| Oseni, E. (2013). Achieving price stability in Nigeria: Monetary policy rate approach vs. Foreign exchange policy approach. Australian Journal of Business and Management Research, 2(2), 32-43. Crossref |
||||
| Owolabi, U. A., & Adegbite, T. A. (2014). Impact of monetary policy on industrial growth in Nigeria. International Journal of Academic Research in Business and Social Sciences, 4(1), 18-31. | ||||
| Sean, M. (2019). The impact of monetary policy on economic growth in Cambodia: Bayesian Approach. Journal of Management, Economics, and Industrial Organization, 3(2), 16-34. Crossref |
||||
| Stawska, J., Malaczewski, M., & Szymańska, A. (2019). Combined monetary and fiscal policy: The Nash Equilibrium for the case of non-cooperative game. Economic Research-Ekonomska Istraživanja, 32(1), 3554-3569. Crossref |
||||
| Sulaiman, L. A., & Migiro, S. O. (2015). An empirical analysis of price stability effect of Nigerian monetary policy (1981-2012). In International Conference on African Development Issues CU-ICADI): Social and Economic Models for Development Track (pp. 314-318). South Africa. | ||||
Copyright © 2026 Integrity Research Journals. All rights reserved.