Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques

This paper contributes to the monetary policy-economic growth debate by investigating whether monetary policy stimulates economic growth in Nigeria. Using time series data from 1970 to 2018 and deploying the autoregressive distributed lag (ARDL) model, bounds and the Bayer- Hanck (2013)...

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Main Authors: Imandojemu Kingsley, Adeleye Bosede Ngozi, Aina Babatunde
Format: Article
Language:English
Published: Faculty of Economics, Belgrade 2023-01-01
Series:Ekonomski Anali
Subjects:
Online Access:https://doiserbia.nb.rs/img/doi/0013-3264/2023/0013-32642336081I.pdf
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author Imandojemu Kingsley
Adeleye Bosede Ngozi
Aina Babatunde
author_facet Imandojemu Kingsley
Adeleye Bosede Ngozi
Aina Babatunde
author_sort Imandojemu Kingsley
collection DOAJ
description This paper contributes to the monetary policy-economic growth debate by investigating whether monetary policy stimulates economic growth in Nigeria. Using time series data from 1970 to 2018 and deploying the autoregressive distributed lag (ARDL) model, bounds and the Bayer- Hanck (2013) cointegration tests, evidence from the main and robustness checks show that (1) a significant long-run association exists, and (2) a percentage increase in the monetary policy rate results in 0.055 percentage decline in economic growth, on average, ceteris paribus. In other words, these findings confirm that a statistically significant inverse relation exists between monetary policy and economic growth in Nigeria. Trade openness also exerts asymmetric contemporaneous (0.094) and lag (-0.059) impacts on economic growth at the 1% and 5% significance levels, respectively. Similarly, the inflation rate contemporaneously reduces economic growth (-0.002) at the 1% significance level while its lag impacts are asymmetric and statistically significant at the 10% and 5% levels, respectively. Policy recommendations are discussed.
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spelling doaj.art-eaef99ddbd7f48f8a14427d1485b75ce2023-06-09T10:42:01ZengFaculty of Economics, BelgradeEkonomski Anali0013-32641820-73752023-01-01682368110310.2298/EKA2336081I0013-32642336081IMonetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniquesImandojemu Kingsley0https://orcid.org/0000-0001-9253-7726Adeleye Bosede Ngozi1https://orcid.org/0000-0002-1274-714XAina Babatunde2https://orcid.org/0000-0001-8107-499XCentral Bank of Nigeria; Department of Economics, Babcock University, NigeriaUniversity of Lincoln, Lincoln International Business School (LIBS), Department of Accountancy, Finance and Economics, UKCentral Bank of NigeriaThis paper contributes to the monetary policy-economic growth debate by investigating whether monetary policy stimulates economic growth in Nigeria. Using time series data from 1970 to 2018 and deploying the autoregressive distributed lag (ARDL) model, bounds and the Bayer- Hanck (2013) cointegration tests, evidence from the main and robustness checks show that (1) a significant long-run association exists, and (2) a percentage increase in the monetary policy rate results in 0.055 percentage decline in economic growth, on average, ceteris paribus. In other words, these findings confirm that a statistically significant inverse relation exists between monetary policy and economic growth in Nigeria. Trade openness also exerts asymmetric contemporaneous (0.094) and lag (-0.059) impacts on economic growth at the 1% and 5% significance levels, respectively. Similarly, the inflation rate contemporaneously reduces economic growth (-0.002) at the 1% significance level while its lag impacts are asymmetric and statistically significant at the 10% and 5% levels, respectively. Policy recommendations are discussed.https://doiserbia.nb.rs/img/doi/0013-3264/2023/0013-32642336081I.pdfmonetary policyeconomic growthinterest rate
spellingShingle Imandojemu Kingsley
Adeleye Bosede Ngozi
Aina Babatunde
Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques
Ekonomski Anali
monetary policy
economic growth
interest rate
title Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques
title_full Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques
title_fullStr Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques
title_full_unstemmed Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques
title_short Monetary policy and economic growth in Nigeria: Evidence from bounds and Bayer-Hanck cointegration techniques
title_sort monetary policy and economic growth in nigeria evidence from bounds and bayer hanck cointegration techniques
topic monetary policy
economic growth
interest rate
url https://doiserbia.nb.rs/img/doi/0013-3264/2023/0013-32642336081I.pdf
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AT adeleyebosedengozi monetarypolicyandeconomicgrowthinnigeriaevidencefromboundsandbayerhanckcointegrationtechniques
AT ainababatunde monetarypolicyandeconomicgrowthinnigeriaevidencefromboundsandbayerhanckcointegrationtechniques