Accounting for the Impact of Monetary Policy on Nigerian Economic Growth: Empirical Assessment (1981-2010)

The growth of an economy is important as it provides for the economic well being of the citizens. Several factors affect the growth of an economy. They include the economic environment, political dispensation, technological development, educational advancement, and infrastructural development. This research attempted to evaluate how monetary policy has affected the Nigerian economy between 1981 and 2010. Relevant theories to this purpose were reviewed and an empirical analysis carried out. To assess whether monetary policy enhances economic growth, relevant data specific to the economy were selected for analysis. In the study, multiple regression analysis was used as a statistical model. Taking money supply, reserve money, interest rate and Treasury bill issued as Index for monetary policy and Gross Domestic Product (GDP) as the yardstick for measuring the efficiency of the monetary policy. The test result supported the fact that there is no significant relationship between monetary instruments and GDP. Consequently, it was deduced that monetary policy is not the only potent tool for ensuring economic growth. This study thus recommended that monetary authorities should come up with income policy that will control inflation, the government should also increase its spending on the productive sector of the economy. This will go a long way in impacting positively on the Gross Domestic Product of the economy and subsequently enhances economic growth.