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This study employs the cointegration technique and the granger causality test to examine the impact and the causal relationship between money supply and economic growth in Nigeria using annual time series data spanning 1980 to 2017. After critical exploration of both the theoretical and the empirical literature, the study concludes that money supply has a positive impact on economic growth. This is evidenced by the presence of cointegrated and long-run relationship among the variables. In addition, the Granger causality test shows the existence of unidirectional causality running from money supply to economic growth, hence result is consistent with numerous empirical literature. As such, government should put in place other policy measures that would encourage the effective workings of money supply in Nigeria. This may include proper engagement of monetary management to ensure that increase money supply does not lead to economic disorder in the long-run.
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In-Text Citation: (Idris, 2019)
To Cite this Article: Idris, M. (2019). Interactive Mechanism of Money Supply and Economic Growth: Analysis of the Causal Relationship in Nigeria. International Journal of Academic Research in Business and Social Sciences, 9(7), 324–338.
Copyright: © 2019 The Author(s)
Published by Human Resource Management Academic Research Society (www.hrmars.com)
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