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BROAD MONEY SUPPLY AND ECONOMIC GROWTH OF NIGERIA
Abstract
The study investigated effect of broad money supply on the growth of the Nigerian economy for the period 1981 to 2021 with the help of the ARDL model of estimation. The objective of the study was to determine effect of money supply on the economic growth of Nigeria. While E-views 11 statistical software was employed for computation of results, time series data was obtained from World Development Indicators (WDI). Results showed that money supply had a long run relationship with real GDP while a combination of the broad money supply indices (monetary policy rate, inflation and interest rates) had no long run relationship with real GDP. The findings also revealed that money supply had a positive and significant short run relationship with economic growth in Nigeria while only interest rate had a positive but insignificant short run relationship with real gross domestic product in Nigeria. Based on the findings, the study recommended among others that the monetary authorities should increase the efficacy of money supply in Nigeria and that the interest rate policies of the Central bank of Nigeria should be relaxed and made investment friendly as it has a significant bearing on the rate of investment, which in turn is a prime mover of economic growth in Nigeria.
Keywords: Broad Money Supply; Economic Growth, Monetary Policy; Inflation