ABSTRACT
The study examined the impact of monetary policy in stabilizing the Nigeria
economy. In the model specified inflation is the regress while cash research
requirement, liquidity ratio, money supply, minimum rediscount rate, interest rate
are the regressors. The government employs a deliberate manipulation of cost and
availability of credit and money to achieve this economic objective. The CBN
being the sole regulatory body combines measures designed to regulate the value,
supply and cost of money into economic activities. This is what we call monetary
policy (CBN Brief 1996/03). It is against this background that the research is
carried out to ascertain the effect in the use of monetary policies such as money
supply, interest rate, liquidity ratio, minimum rediscount rate, inflation rate and
cash reserve requirement to stabilize the Nigeria economy. Also to determine the
relationship that exists between the independent variables and dependent variable
from the secondary data for the period under study (1980 - 2010). The statistical
technique that will be used for this analysis is the ordinary least square technique,
with the aid of PC five 8.00 software package. It has been identified that the major
problem militating against the poor performance of monetary policy instruments in
stabilizing the economic in Nigeria is time – lags which involves policy employed
to take many months to achieve its full effects. This research recommends that
there should be a reduction in the cost of production and increase the exportation in
order to achieve the objectives of naira devaluation in Nigeria and also, central
banks should be independent and should be able to achieve its inflation targets and
the stabilization of growth rate in money supply.
TABLE OF CONTENTS
Title page - - - - - - - - - - i
Certification page - - - - - - - - ii
Dedication - - - - - - - - - - iii
Acknowledgement - - - - - - - - iv
Abstract - - - - - - - - - - v
Table of contents - - - - - - - - - vi
CHAPTER ONE
1.1 Background of the study - - - - - - 1
1.2 Statement of problem - - - - - - 3
1.3 Statement of objectives - - - - - - 3
1.4 Statement of hypothesis - - - - - - 4
1.5 Significance of the study - - - - - - 5
1.6 Scope and limitation of the study - - - - - 5
1.7 Definition of terms - - - - - - - 6
CHAPTER TWO
2.0 Literature Review - - - - - - - 7
2.1.0 Theoretical literature - - - - - - - 7
2.1.1 The Keynesian view on monetary policy - - - - 9
2.1.2 The classical view on monetary - - - - - 14
2.1.3 The monetarist view of monetary policy - - - - 16
2.2.0 Meaning, instruments and objectives of monetary policy - - 21
2.2.1 Instruments of monetary policy - - - - - 25
2.2.2 Open market operation (OMO) - - - - - 25
2.2.3 Reserve requirement ration - - - - - - 26
2.2.4 Discount rate - - - - - - - - 27
2.2.5 Selective credit controls - - - - - - 28
2.2.6 Moral suasion - - - - - - - - 28
2.3.0 Objectives of monetary policy - - - - - - 29
2.4.0 Monetary policy indicators - - - - - - 30
2.5.0 Monetary policy targets and implication to the Nigerian Economy- 31
2.6.0 Factors that have militated against the impact of monetary policy
in Nigeria - - - - - - - - -32
2.6.1 Instability of the financial sector - - - - - 32
2.6.2 Poor state of Economic infrastructure - - - - 33
2.6.3 Non-Harmonization of monetary and fiscal policy - - - 33
2.6.4 Increase in government expenditure - - - - 33
2.6.5 Equate rate bank - - - - - - - 34
2.7.0 The impact of monetary policy during the depression Era
of structural adjustment programme (SAP) - - - 34
2.8.0 Debt management as an integrated part of monetary policy - 36
2.9.0 The impact of monetary policy on the economy - - - 38
2.10.0 Economic stabilization - - - - - - 38
2.11.0 Empirical literature review - - - - - - 40
CHAPTER THREE
3.0 Methodology - - - - - - - - 46
3.1 Theoretical framework - - - - - - - 47
3.2 Estimation procedure - - - - - - - 48
3.3 Model specification - - - - - - - 49
3.4 Method of evaluation - - - - - - - 51
3.5 Data required and sources - - - - - - 53
3.6 Decision rule - - - - - - - - 53
CHAPTER FOUR
4.0 Presentation of analysis of result - - - - - 55
4.1 Presentation of regression result - - - - - 55
4.2 Result interpretation - - - - - - - 56
4.2.1 Evaluation based on Economic criteria - - - - 56
4.2.2 Statistical test (first order test) - - - - - 57
4.2.3 Econometrics test (second order test) - - - - - 61
CHAPTER FIVE
5.0 Summary, Recommendations and Conclusion - - - 68
5.1 Summary of findings - - - - - - - 68
5.2 Recommendations - - - - - - - 69
5.3 Conclusion - - - - - - - - 70
BILBIOGRAPHY - - - - - - - - 72
APPENDIX
