Effects of monetary policy on inflation in Nigeria (1986-2013)


  • Department: Economics
  • Project ID: ECO1030
  • Access Fee: ₦5,000
  • Pages: 85 Pages
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  • TITLE PAGE
    THE EFFECT OF MONETARY POLICY ON INFLATION IN NIGERIA
    (1986-2013)
    BY
    OLUWATIMILEHIN A. OYEKUNLE
    12/27ED/062
    BEING A RESEARCH PROJECT SUBMITTED TO THE
    COLLEGE OF HUMANITIES, MANAGEMENT AND SOCIAL SCIENCES,
    DEPARTMENT OF ECONOMICS AND DEVELOPMENT STUDIES
    KWARA STATE UNIVERSITY
    IN PARTIAL FULFILMENT OF THE REQUIREMENT OF THE AWARD OF
    BACHELOR OF SCIENCE (B.Sc) DEGREE IN ECONOMICS
    MAY, 2016
    1
  • CERTIFICATION
    I hereby certify that this research work was carried out by Oluwatimilehin A Oyekunle
    with matric number 12/27ed/062 in the Department of Economics and development
    studies, College of Humanities, Management and social sciences, Kwara State University
    Malate. The project has been read and approved as meeting of the requirements for the
    award of Bachelor of Sciences (B.Sc. Hons) Degree in Economics.
    -------------------------------------------------------
    -
    PROF. LANSANOU KEITA Date
    Supervisor
    --------------------------------------------------------
    -
    PROF. LANSANOU KEITA Date
    Head of Department
    ------------------------------- --------------------------
    PROF. SAKA MAMUD Date
    Provost of College H.M.S.S
    -----------------------------------------------------------
    -
    External Examiner Date
    2
  • DEDICATION
    I dedicate this project work to Almighty God, and to my loving parents
    Mr. T.A and Mrs. M.E OYEKUNLE for all their support throughout the
    pursuit of my academic careers. I equally dedicate it to the rest of my
    family and my unborn children.
    3
  • ACKNOWLEDGEMENT
    My in depth gratitude goes to Almighty God for His blessings,
    favour and mercy. I am grateful for his endless love, protection,
    guidance, grace and showers of blessings upon me and my family.
    I also magnify the name of the God for his provision towards my
    tuition fees and also for the divine wisdom, knowledge and
    understanding.
    I express my profound appreciation to my loving and caring
    families, Mr. T.A OYEKUNLE, Mrs. M.E OYEKUNLE and my lovely brothers
    which are Mr. O.K OYEKUNLE(Corewell), Adeniyi OYEKUNLE (Solarwilly),
    Ayodele OYEKUNLE (Hayo Clothing) and my sisters Omolara AYORINDE
    and Aminat BABATUNDE.
    Besides, I thank my amiable supervisor Prof. Lansanou Keita for
    pains in taking time to look into my project work despite his tight
    schedules May the almighty grant him his heart desires (amen). Also, I
    want to appreciate all lecturers in the department of economic that
    have taken me one course or the other. Thank you so much.
    4
  • I also want to appreciate all Kwasu Baptist Student Fellowship
    family and my decorating unit members (2015/2016 session) for their
    prayers and support. I cannot but remember my friends in school Zee,
    Jamiu (osha), B.E.B, Johnson (prof), Toyosi, Kudrat, Tolu, Lekan (lekkyl),
    Wale, Bunmi, A.Ife, Kemi, Damola, Suliat, Stephen, Olamoney, Boda
    Luku, Richky, Slimkris, Horlano and all current economic May
    the Almighty God crown all your e=orts.
    My appreciation also goes to Yusuf Babatunde and Olaitan Saka
    for their hospitality and for taking me has a brother, may God almighty
    bless you two and your entire family. My special thanks once again go
    to my father, my lovely mother, Olawale oyekunle, Mrs Babatude and
    Mrs. Abidoye for their support morally, lly and spiritually
    throughout till the completion of my programme.
    5
  • ABSTRACT
    This paper focuses on the effect of monetary policy on inflation in Nigeria, using time
    series data from 1986-2013 obtained from the Central Bank of Nigeria’s Statistical
    Bulletin. The main purpose is to investigate the extent to which the apex monetary
    authority- the Central Bank of Nigeria has addressed adverse changes in price, output
    and interest rates through the use of monetary policy instruments. For this analysis,
    ordinary least square, ADF and Durbin Watson statistics was adopted. The findings show
    that the level of significant was 1% (0.01) and maximum lag 1(one). It then shows that
    three of the variables which are INF, INTR and M2 have unit root at first order or level
    and GDP at second order or level. It also shows that monetary policy has a positive and
    significant relationship with the general price level. It equally reveals that interest rate
    exerts a negative and significant influence on inflation and on the other hand gross
    domestic product has a negative and significant influence on inflation. The paper
    therefore recommends among others that the autonomy granted the CBN should be
    sustained and even strengthened since it is only an independent monetary authority that
    can pursue the objective of price stability at the cost of other objectives.
    6
  • TABLE OF CONTENTS
    TITTLE PAGEi
    CERTIFICATIONii
    DEDICATIONiii
    ACKNOWLEDGEMENTiv
    ABSTRACTv
    TABLE OF CONTENTSvii
    CHAPTER ONE
    1.0Introduction
    1
    1.1Background to the Study
    1
    7
  • 1.2Statement of the Problem
    7
    1.3Objective of the study
    8
    1.4Statement of hypothesis
    9
    1.5Signi
    9
    1.6 Scope and Limitation of the Study
    9
    1.7 Organization of the study
    10
    CHAPTER TWO
    2.0Introduction
    11
    2.1Conceptual Review
    11
    2.1.1Conceptual Definition of Monetary Policy11
    2.1.2 The Objectives of Monetary Policy in Nigeria 12
    8
  • 2.1.3Instrument of Monetary Policy in Nigeria15
    2.1.4Monetary Policy Regimes in Nigeria18
    2.1.5Monetary Policy Before the Structural Adjustment Programme (Sap)18
    2.1.6Monetary Policies under the Structural Adjustment Programme (SAP)22
    2.1.7Nigeria’s Monetary Policy and the Demand for Reserve Currencies27
    2.1.8Concept of Inflation30
    2.1.9Effects of Inflation31
    2.1.10 Measures of Inflation31
    2.1.11Measures To Control Inflation32
    2.2Theoretical Review33
    2.2.1Demand-Pull Inflation or Monetary Theories of Inflation33
    2.2.2Keynes’s Theory of Demand-Pull Inflation34
    2.2.3Cost-Push Inflation37
    2.2.4Theories of Monetary Policy39
    2.3Empirical Review47
    CHAPTER THREE
    3.0Introduction53
    3.1 Sources of Data53
    9
  • 3.2Model Specification 53
    3.3Estimation Technique55
    3.4Evaluation Criteria56
    CHAPTER FOUR
    4.1 Introduction 59
    4.2Presentation and Evaluation of Regression Result59
    4.2.1The Test for the Unit Root ADF (Augmented Dickey-Fuller Test)59
    4.2.2Regression Analysis60
    4.3Interpretation of the Result61
    4.4Evaluation Base on Statistical Test 62
    4.4.1T-Statistics62
    4.4.2F-statistics63
    4.4.3Trend of Inflation64
    4.5 Evaluation Base on Economic Theory64
    4.5.1 Trends between inflation and interest rate66
    4.5.2Trends between inflation and GDP67
    4.6Econometric Criteria 67
    4.6.1Test for Autocorrelation67
    10
  • 4.6.2Test for Heteroscedasticity68
    CHAPTER FIVE
    5.1 Summary of the study69
    5.2Conclusion 70
    5.3Policy Recommendation70
    REFERENCES72
    APPENDIX75
    11
  • Department: Economics
  • Project ID: ECO1030
  • Access Fee: ₦5,000
  • Pages: 85 Pages
  • Reference: YES
  • Format: Microsoft Word
  • Views: 318
Get this Project Materials

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