Analysis of the impact of monetary policy shocks on domestic output growth in Nigeria: evidence from dynamic ARDL and VECM tests

TERHEMBA İOREMBER P., Jelilov G., Alymkulova N., Gbaka S.

International Journal of Public Policy, vol.16, no.1, pp.13-25, 2021 (Scopus) identifier

  • Nəşrin Növü: Article / Article
  • Cild: 16 Say: 1
  • Nəşr tarixi: 2021
  • Doi nömrəsi: 10.1504/ijpp.2021.121955
  • jurnalın adı: International Journal of Public Policy
  • Jurnalın baxıldığı indekslər: Scopus, International Bibliography of Social Sciences, Aerospace Database, Communication Abstracts, EconLit, INSPEC, Metadex, Civil Engineering Abstracts
  • Səhifə sayı: pp.13-25
  • Açar sözlər: ARDL, contractionary policy, domestic output, expansionary policy, monetary policy shocks
  • Açıq Arxiv Kolleksiyası: Məqalə
  • Adres: Bəli

Qısa məlumat

The study analyses the impact of monetary policy shocks on domestic output growth in Nigeria from 1981 to 2019, using ARDL and VECM Granger causality. Employing three monetary policy variables of interest rate, broad money supply and exchange rate, the empirical results establish that shocks in money supply have positive impact on domestic output growth in the long-run, while shocks in interest rate and exchange rate have negative impact on domestic output growth in the long-run. Furthermore, the results affirm a unidirectional causality from money supply to real gross domestic product, and from real gross domestic product and interest rate to exchange rate in Nigeria. The study recommends that the use of the interest rate channel in pursuing the goal of output growth should be applied with caution, while the money supply tools should be made more vibrant, towards achieving increased domestic output growth.