MONETARY POLICY SHOCKS AS DETERMINANTS OF LIFE EXPECTANCY INNIGERIA

Abstract

Life expectancy in Nigeria is quite low when compared with that of the developed nations of the world.
Some health economists often attribute this low life expectancy to some factors, including stressful life
situations occasioned by prevailing economic hardship, especially with respect to monetary policy
shocks. The monetary policy shocks were real exchange rate depreciation and variations in interest
rates. To either confirm or disprove this attribution, the study investigated the monetary policy shocks as
determinants of life expectancy in Nigeria. The human development index was used as a proxy to
measure life expectancy. The data for the study were sourced from the CBN Statistical Bulletin (2023),
the National Bureau of Statistics (2023), and the United Nations (2023), Human Development Index
report. Data collected were analyzed using vector error correction model (VECM), Co-integration, and
Granger causality. The result of the study indicated that: (i) There is a significant negative impact of real
exchange depreciation on life expectancy in Nigeria at lag 1. This showed that an increase in real
exchange rate depreciation made life expectancy decrease. But no significant relationship between real
exchange rate depreciation and life expectancy was observed at lag 2. (ii) There is no significant
relationship between variation in interest rate and life expectancy in Nigeria at lag 1 and lag 2. It was
recommended inter alia that the government should create an enabling environment and incentives that
will attract investors and tourists from the Western world into the country. This will improve the demand
for the naira, leading to the appreciation of the naira against the dollar