Understanding the Macroeconomic Implications of the Dynamics of Monetary Policy Measures: Lesson from the Nigerian Economy (Published)
In this paper, econometrics evidence linking monetary policy measures to key macroeconomic goals with emphasis on price stability and unemployment is provided using error correction mechanism (ECM), unit root and cointegration tests in addition to basic descriptive statistics. The unit root test results showed that the variables are mixed integrated. The outcomes of the cointegration test reveal that the variables in each of the models have long run relationship and as such can be represented as an ECM. The estimated parsimonious ECM show that the current values of cash reserve ratio and exchange rate as well as lagged values of credit to the private sector are positively and significantly related to inflation. On the contrary, the short run effect of contemporaneous and lagged values of interest rate on inflation is negative. Additionally, money supply exerts significant negative effect on inflation during the study period. The result of the estimated unemployment model reveals that the current and first lag of interest rate has significant positive effect on unemployment. The result also shows that the current and third lag of money supply has significant positive impact on unemployment rate. The short run impact of credit to the private sector and third lag of exchange rate on unemployment is negative. The error correction coefficients in each of the models are associated with the expected negative sign and are statistically significant at 5 percent level. Owing to the findings, the paper recommends that the Central Bank of Nigeria should adequately monitor the implementation of monetary policy in order to prevent or reduce bottlenecks that may impair its effectiveness in achieving goals of price stability and employment generation.
This study examined the relationship between monetary policy and the performance of the Nigerian capital market using annual time series data sourced from the Central Bank of Nigeria Statistical Bulletin. The objective was to examine the long and short run relationship that exists between monetary policy variables and the performance of Nigerian capital market. Market capitalization and market turnover was modeled as the function of interest rate, exchange rate, monetary aggregates, monetary policy rate and treasury bill rate. The study applied the Ordinary Least Square (OLS) regression technique and causality, unit root, cointegration, vector error correction estimates. Findings revealed that interest rate, exchange rate monetary aggregate and monetary policy rate have positive and significant relationship with market capitalization but treasury bill rate have negative and significant relationship with market capitalization. Monetary policy rate, monetary aggregate and exchange rate have positive relationship with market turnover while Treasury bill rate and interest rate have negative and significant relationship with market turnover. The unit root test found the variables stationary at first difference, the cointergration test validates the presence of long run relationship, the granger causality test proved unidirectional causality while the vector error correction estimates justified adequate speed of adjustment. The study concludes that monetary policy has significant relationship with performance of Nigeria capital market. We recommend that the monetary authorities should ensure effect monetary policy transmission mechanism that will enhance the performance of the capital market.
The study determines the effect of government policies in both monetary and fiscal policies on price stability in Nigeria. Secondary data were sourced from CBN statistical bulletin for GR, GE, CRR, MPR & CPI. The study using OLS technique discovered that the combination of both monetary and fiscal instruments impacted on consumer price index in Nigeria within the period of review and concludes that regardless of the mixed individual impacts of the variables; government policies were able to manage consumer price index to a considerable extent. Thus, recommends enhanced fiscal procedures and monetary policies to facilitate desired price stability.
Effects of Monetary Policy on Bank Lending in Nepal (Published)
Bank lending and monetary transmission mechanism are closely interlinked phenomena. Banks cannot be efficient in their performance without analyzing the impact of monetary policy actions. On the other hand, central bank cannot take appropriate policy actions without having appropriate knowledge of bank lending behavior. This study attempts to find out the impact of monetary policy actions such as cash reserve ratio, open market operations and bank rate on bank lending. In the study, panel data of 24 commercial banks during the period of 1996 to 2015 were collected and analyzed using descriptive statistics, correlation and regression analysis. This analysis shows that open market operations and cash reserve ratio have negative impact but bank rate has positive impact on bank lending. Therefore, the central bank of Nepal should rely mostly on open market operations and cash reserve ratio for monetary operation. Further, the study recommends that central bank should hold cash reserve ratio constant as a cushion for the borrowers from fluctuating lending rates by commercial banks. However, since excessive borrowing will have inflationary effect in the economy, the study recommends that central bank commit commercial banks to open market operations to control short term interest rate and money supply in the economy.
Macroeconomic Analysis of the Relationship between Monetary Policy Instruments and Inflation in Nigeria (Published)
This study examined the role of monetary policy instruments in controlling inflation in Nigeria. The study adopted interest rate, minimum rediscount rate, liquidity ratio, and cash reserve ratio as proxy for monetary policy instruments and the independent variables. These were regressed against inflation rate, the dependent variable. Secondary time series panel data for the period covering 1982 to 2011, were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin in 2011. The study employed multiple regression technique based on E-views 7 computer software to analyze data obtained on the study variables. Four hypotheses were tested and the null hypotheses were accepted based on the regression results. The study found that interest rate, minimum rediscount rate, liquidity ration and cash reserve ratio had no significant influence on inflation. The study recommended that Nigeria shift from being a consumption driven (import) economy to production based (export) economy for the impacts of these policies to achieve desired results.