A Logarithmic Analysis of Nigeria’s Monetary Policy Thrust and GDP: 1980-2015

Prof. Olufemi Oludimu & DR. Barine Michael Nwidobie

Abstract


This study aims to determine the thrusts of variations in the Central Bank of Nigeria (CBN) monetary policies from 1980-2015 and its effects on Nigeria’s GDP. Results show that the CBN had an unclear and non-directional monetary policy thrust in the pre-SAP, SAP and post-SAP eras, and a clear directional monetary thrust policy in subsequent periods: easy and tight policy thrusts in the consolidation and post-global economic crisis eras respectively. OLS analysis of logarithmic values of data on GDP, CRR, MPR, LR and LDR for the study period shows that a positive relationship exists between GDP and CRR; and negative relationships exist between GDP and MPR, LR and LDR. These findings make evident the need for Nigeria’s monetary regulators to harmonize the direction of variations in monetary policy instruments; increase CRR and reduce MPR, LR and LDR to improve economic growth in the country and eliminate unethical banking practices with negative consequences on the financial sector, the economy and the entire country.    


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