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The aim of this study was to investigate the relationship between monetary policy instruments and economic growth in Nigeria using annual time series data from 1986 to 2018. Within this broad objective, the specific objectives were to ascertain the relationship between: (1) crude oil price and economic growth; (2) exchange rate and economic growth; (3) inflation rate and economic growth in Nigeria; (4) interest rate and economic growth in Nigeria; and (5) broad money supply and economic growth in Nigeria. Economic growth was proxied by real gross domestic product growth rate. The data were sourced from the publications of the Central Bank of Nigeria (CBN), Statista.com, and the World Bank. The estimation technique was the ordinary least squares (OLS)-based auto-regressive distributed-lag (ARDL) method with the aid of EViews software. The estimated model was evaluated using some diagnostic tests (serial correlation test, normality test, and stability test). The empirical results showed that only interest rate had a positive (0.42) and significant (10%) impact on economic growth in Nigeria in the short run. In the long run, previous gross domestic product and broad money supply had significant impacts on economic growth in Nigeria. The previous gross domestic product had a negative (-0.72) and significant (10%) impact while broad money supply had a negative (-0.000005) and significant (5%) impact on economic growth in Nigeria. In order to effectively use monetary policy instruments in achieving sustainable economic growth, it was recommended that the monetary authority should develop and implement an expansionary monetary policy capable of creating rapid growth of money supply which would lead to a decrease in interest rate which in turn would lead to increase in aggregate investment. These would lead to an increase in economic growth, if properly implemented.
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In-Text Citation: (Shaibu & Enofe, 2021)
To Cite this Article: Shaibu, I., & Enofe, E. E. (2021). Monetary Policy Instruments and Economic Growth in Nigeria: An Empirical Evaluation. International Journal of Academic Research in Business and Social Sciences, 11(5), 864–880.
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