AN ANALYSIS OF THE IMPACT OF MONETARY POLICY ON ECONOMIC GROWTH INNIGERIA

Abstract

Monetary policy, implemented by Central banks, plays a crucial role in stabilizing the economy,
influencing investment, Consumption, and overall economic activity. This study investigates the effect of
monetary policy on economic growth, with a focus on the role of key policy instruments such as interest
rates, Gross Domestic Product, Broad Money Supply and Exchange rates. Using annual time-series
data between 1999-2023.The research examines the relationship between monetary policy variables
and GDP growth. Augmented Dicker Fuller (ADF) and Philip-Perron tests were used for unit root and
Philip Quliaris Cointegration test was used to determined long-run relationship. The findings suggest
that an effective and well-cordinated monetary policy significantly enhances economic growth by
maintaining price stability and promoting investor confidence. The study recommends that
policymakers ensure transparency, strengthen monetary transmission mechanisms, and align monetary
policy objectives with long-term development goals to foster sustainable economic growth. The following objectives are to ascertain the extent to which money supply affect Gross domestic product in
Nigeria, to evaluate the extent to which monetary policy rate impact on gross domestic product in Nigeria and also analyze the nature of relationship between exchange rate and gross domestic product
in Nigeria.