The aim of this study was to investigate the effect of monetary policy variables that were consistently adopted by the Central Bank of Nigeria (CBN), on the inflation rate in Nigeria for the period 2009-2014. Two key issues where addressed; one, whether there was a significant relationship between the policy variables adopted and inflation. Two, whether the combined impact of all these variables adopted, was significant on the inflation rate. Data was sourced from the CBN’s statistical bulletin 2014, from the website of the CBN and the National Bureau of Statistics (NBS). The Ordinary Least Squares (OLS) method was adopted because of its best linear unbiased estimation (BLUE) property. The Augmented Dickey-Fuller test for stationarity, showed that the variables were all stationary at order one (1). Cointegration test also revealed that a long run relationship exists among the variables. The results show that apart from the MPR, all other policy variables were significant at the 5% level of significance (the monetary policy horizon) and this addressed the first key issue highlighted. For the second key issue, the estimation model displayed that all the explanatory variables adopted by the CBN (as used in this research) accounted for 61% of the variation in the inflation rate as regards its rise or drop. Hence, the combined effect of all the variables adopted by the CBN did reduce the inflation rate, as the monetary policy shocks did get traction on the economy in arriving at the policy trajectory of an inflation band of 6-9%. The CBN should constantly examine its policy environment to determine the instrument mix optimization that best serves its prime purpose of macroeconomic stability, especially when its inflation target is achieved.
Inhaltsverzeichnis (Table of Contents)
- CHAPTER I
- INTRODUCTION
- 1.1 Background to the Study
- 1.2 Statement of the Problem
- 1.3 Objectives of the Study
- 1.4 Research Questions
- 1.5 Research Hypotheses
- 1.6 Significance of the Study
- 1.7 Scope of Study
- CHAPTER II
- REVIEW OF RELATED LITERATURE
- 2.1 Conceptual Framework
- 2.1.1 The Concept of Inflation and Inflationary Pressures
- 2.1.2 The Concept of Monetary Policy and Monetary Policy Tools
- 2.2 Theoretical Framework
- 2.2.1 Demand Oriented Theories of Inflation
- 2.2.2 Supply Oriented Theories of Inflation
- 2.2.3 The Structuralist's View of Inflation
- 2.2.4 The Monetarists' Theory of Inflation
- 2.3 Monetary Policy and Macroeconomic Stability
- 2.4 Strategies of Monetary Policy to Achieve Macroeconomic Stability
- 2.4.1 Monetary Targeting
- 2.4.2 Price Level Targeting
- 2.4.3 Inflation Targeting
- 2.5 Tools of Monetary Policy
- 2.5.1 Direct tools of Monetary Policy
- 2.5.2 Indirect Instruments of Monetary Policy
- 2.6 Empirical Literature Review
- 2.6.1 Empirical Research Gap
- CHAPTER III
- METHODOLOGY
- 3.1 Research Design
- 3.2 Nature and Sources of Data collection
- 3.3 Model Specification
- 3.4 Description of variables
- 3.4.1 Inflation
- 3.4.2 Bank Reserve Requirement (REQ)
- 3.4.3 Money Supply
- 3.4.4 Exchange Rate (EXR)
- 3.4.5 Monetary Policy Rate (MPR)
- 3.4.6 Treasury Bills Rate (TBR)
- 3.5 Econometric tests
- 3.5.1 The Unit Root Model
- 3.5.2 Co-integration Test
- 3.5.3 Error Correction Model
- 3.6 Hypotheses Testing
- 3.6.1 t-test- (significance test)
- 3.6.2 F-test
- 3.6.3 Goodness of fit test (R²)
- 3.7 Model to Test Hypotheses
- 3.7.1. Broad money supply has no major impact on the rate of inflation
- 3.7.2. The Exchange rate movement has no significant effect in checking a spike in the inflation rate for the period under study.
- 3.7.3. The Monetary policy rate has no significant effect on the rate of inflation.
- 3.7.4. The treasury bills rate movement does not have an effect on the rate of inflation?
- CHAPTER IV
- DATA PRESENTATION, ANALYSIS OF RESULT AND DISCUSSION
- 4.1 Data Presentation and Analysis
- 4.2. Ordinary Least Square Regression Result
- 4.3 Unit Root Test
- 4.4 Johansen Cointegration Test
- 4.5 Error Correction Mechanism
- 4.6 Hypotheses testing
- 4.6.1 Broad Money supply has no major impact on the rate of inflation
- 4.6.2 The Exchange rate movement has no significant effect in checking a spike in the inflation rate for the period under study
- 4.6.3 Monetary policy rate has no significant effect in checking a spike in the inflation rate.
- 4.6.4 The Treasury bills rate does not have a significant effect in restraining an increase in the inflation rate.
- 4.7 Discussion of Findings
- 4.7.1 Money Supply (MS)
- 4.7.2 Exchange Rate (EXR)
- 4.7.3 Monetary Policy Rate (MPR)
- 4.7.4 Treasury bill Rate (TBR)
- CHAPTER V
- SUMMARY, CONCLUSION AND RECOMMENDATIONS
- 5.1 Summary of findings
- 5.2 Conclusion
- 5.3 Contribution to knowledge
- 5.4 Recommendations
- 5.4.1 For further studies
- 5.5 Limitations of the Study
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This thesis investigates the impact of monetary policy on inflation in Nigeria between 2009 and 2014. The primary objective is to determine the effectiveness of monetary policy tools in controlling inflation during this period. The study examines the relationship between key monetary policy variables, including money supply, exchange rates, monetary policy rates, and treasury bill rates, and their influence on inflation. The thesis seeks to contribute to the understanding of the role of monetary policy in managing inflation within a developing economy like Nigeria.- The effectiveness of monetary policy tools in controlling inflation in Nigeria.
- The relationship between monetary policy variables and inflation.
- The impact of specific monetary policy instruments on price stability.
- The significance of monetary policy in managing inflation within a developing economy.
- Insights into the challenges and limitations of implementing monetary policy in Nigeria.
Zusammenfassung der Kapitel (Chapter Summaries)
- Chapter I introduces the research topic, providing background information on the study, outlining the problem, objectives, and research questions. It also discusses the significance and scope of the study.
- Chapter II presents a comprehensive review of relevant literature, focusing on the conceptual and theoretical frameworks surrounding inflation and monetary policy. It explores various theories of inflation, discusses the role of monetary policy in achieving macroeconomic stability, and examines different monetary policy strategies and tools.
- Chapter III delves into the research methodology employed in the study, outlining the research design, data collection methods, model specification, variable descriptions, and econometric tests used to analyze the data. It also details the hypotheses to be tested.
- Chapter IV presents the data, analyses the results obtained, and discusses the findings of the study. It examines the relationship between monetary policy variables and inflation, testing the hypotheses proposed in the previous chapter.
Schlüsselwörter (Keywords)
The primary keywords and focus topics of this thesis include monetary policy, inflation, Nigeria, macroeconomic stability, monetary policy tools, money supply, exchange rate, monetary policy rate, treasury bill rate, econometric analysis, and developing economies. The research focuses on the effectiveness of monetary policy in controlling inflation in Nigeria, utilizing empirical data and econometric models to examine the relationship between various monetary policy variables and inflation.- Citar trabajo
- Tonprebofa Okotori (Autor), 2017, Monetary Policy and its Effects on Inflation in Nigeria 2009 - 2014, Múnich, GRIN Verlag, https://www.grin.com/document/433182
