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Monetary Policy Tools and Nigeria’s Manufacturing Sector Output

Author

Listed:
  • Prof. J. O. Aiyedogbon

    (Department of Economics, Bingham University, Karu-Nigeria)

  • Ezie Obumneke

    (Department of Economics, Bingham University, Karu-Nigeria)

  • Ropheka E. Bot

    (Department of Economics, Bingham University, Karu-Nigeria)

Abstract

Manufacturing sector output has been experiencing dwindling output over the years, despite the efforts by the monetary authorities. Manufacturing sector in any economy is seen as one of the drivers of industrialization and economic development, as such government policies affect their performance. Hence, this paper examined the asymmetric effect of monetary policy tools on Nigeria’s manufacturing sector output between 1986 and 2022. Non-linear Autoregressive Distributed Lag (NARDL) method was adopted in carrying out empirical analysis. Cointegration using bounds test revealed the variables have long-run relationship. Findings from the paper revealed that positive effect of private sector credit has a corresponding positive impact on manufacturing sector output. While the negative effect led to a decrease in the output. Further findings showed that positive effect of monetary policy rate led to an increase in manufacturing sector output; while the negative effect led to a decrease in manufacturing sector output. Both variables were found to have statistically insignificant relationship with manufacturing sector output in Nigeria during the period covered. Based on these findings, the monetary authorities are encouraged to continue with improving programmes or schemes that will lead to more funding for the manufacturing; and are encouraged to take into account monetary policy that captures the economic reality on the ground.

Suggested Citation

  • Prof. J. O. Aiyedogbon & Ezie Obumneke & Ropheka E. Bot, 2023. "Monetary Policy Tools and Nigeria’s Manufacturing Sector Output," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(8), pages 1101-1114, August.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:8:p:1101-1114
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    References listed on IDEAS

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    1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
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