ABSTRACT 

The purpose of this project work is based on the relative performance of monetary policy in the 

Nigerian economy. This work discussed the meaning of monetary policy is as combination of 

measures designed to regulate the value, supply and cost of money in an economy in 

consonance with the expected value of economies activities. The study shows further, the aims 

and objectives of monetary policy which includes price stability, maintenance of balance of 

payment equilibrium, promotion of employment, tackling inflation, output growth and 

sustainable development. The literature review shed more light on conceptual and evolutionary 

framework of monetary policy in Nigeria, review of monetary policy before and offer the 

structural adjustment programme (SAP), and appraisal of the performance of monetary policy 

in Nigeria were thoroughly discussed. also appropriate measures for managing inflation in the 

economy were also suggested from the research instruments and techniques, if was observed 

that there are leakages in velocity of money through corrupt practices in the system and 

diabolic means of creating cash flow which causes inflation, multiplicity of unemployment and 

low output growth. The research work, also showed the interplay between the gross domestic 

product (GDP) and other monetary policy variables (real exchange rate, real interest rate, 

money supply and liquidity ratio), and their respective contribution to the economy. In 

conclusion this project suggests total means of curling corruption using the various law 

enforcements in the country.  

                   TABLE OF CONTENT

Certification ------------------------------------------------------------------------ i

Acknowledgement ----------------------------------------------------------------ii

Dedication --------------------------------------------------------------------------iii

Abstract -----------------------------------------------------------------------------iv

CHAPTER ONE

1.1 Introduction ----------------------------------------------------------------1

1.2 Background of the study -------------------------------------------------1

1.3 Statement of the problem -----------------------------------------------7

1.4 Objectives of the study ---------------------------------------------------8

1.5 Statement of hypothesis -------------------------------------------------9

1.6 Scope and limitations of the study -------------------------------------9

1.7 Significance of the study -------------------------------------------------9

CHAPTER TWO

2.0 Literature review ------------------------------------------------------------11

2.0.1 Conceptual definition of monetary policy -----------------------------11

2.0.2 Evolution of the monetary policy framework in Nigeria ------------12

2.0.3 Review of the monetary policy before the StructuralAdjustment Programme (SAP) --------------------------------------------------16

2.1 Theoretical literature review ---------------------------------------------19

2.1.1 Monetary policy under the Structural Adjustment

Programme (SAP) -----------------------------------------------------------------19

2.1.2 Nigeria monetary policy experience -------------------------------------23

2.2 Empirical literature review -----------------------------------------------28

2.2.1. Framework of monetary policy in targeting inflation ---------------28

2. 2.2 An appraisal of the performance of monetary policy in Nigeria --30

2.2.3 Suggestion for dealing with inflation in Nigeria -----------------------33

CHAPTER THREE

3.0 Research methodology -------------------------------------------------------37

3.1 Model specification -----------------------------------------------------------37

3.2 Method of evaluation --------------------------------------------------------39

3.2.1Unit root test -----------------------------------------------------------------39

3.2.2Presentation of co-integration and error corrections ----------------40

3.2.3 Diagnostic tests --------------------------------------------------------------40

3.3 Justification of the model ----------------------------------------------------40

3.4 Research approach -----------------------------------------------------------41CHAPTER FOUR

4.0 Presentation of data and discussion of results --------------------------42

4.1 Presentation of data ----------------------------------------------------------42

4.1.1 Unit Root Test ----------------------------------------------------------------42

4.1.2 Co-integration Test ----------------------------------------------------------45

4.2 Economic Opinion, Interpretation/Appriori Criteria --------------------48

4.3 Statistical Criteria of the Results ---------------------------------------------48

4.3.1 T-test ----------------------------------------------------------------------------48

4.3.2 F-test ----------------------------------------------------------------------------49

4.4 Economic Criteria ---------------------------------------------------------------50

4.4.1 Test for Autocorrelation -----------------------------------------------------50

4.4.2 Normality test ------------------------------------------------------------------51

4.4.3 Test for multicollinearity -----------------------------------------------------52

CHAPTER FIVE

Summary -------------------------------------------------------------------------------55