An Emprirical Analysis of the Effect of Monetary Policy on Economic Growth in Nigeria
Napoleon David Okosu

Abstract
This study investigated the impact monetary policy and economic growth in Nigeria using quarterly time series data from 1981 to 2020. The paper used growth rate of gross domestic product (GRGDP) as the dependent variable while broad money supply (MS2), monetary policy rate (MPR), Inflation (INFL), liquidity ratio (LDQR) and exchange rate (EXCH) were the independent variables as well as proxies for monetary policy. Data were obtained from Central Bank of Nigeria’s Statistical Bulletin of various years and World Bank National Account Data. The study used descriptive statistics, performed unit root test using Augmented Dickey Fuller, and used the Autoregressive Distributed Lag (ARDL) model based on the E-views 10.0 software as methods of data analysis. The empirical findings indicated that Broad Money supply has a negative but insignificant effect of economic growth, the same result was observed for Inflation and exchange rate in the long run. While an insignificant positive relationship was found to exist between Monetary Policy rate and economic growth, liquidity ratio also had a positive nexus with economic growth in the long run. Consequent upon the findings, the study recommends that Monetary Policy authorities should give Monetary Policy Rate priority attention to enable it drive economic growth, persuade lenders not to lend at extremely high interest rate, ensure good coordination with the fiscal policy authorities and strive to enhance financial inclusion.

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