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Impact of Monetary Policy on Food, Beverages and Tobacco Output in Nigeria: 2000-2023

Author

Listed:
  • Elizabeth Obiaje

    (Department of Economics, Faculty of Social Sciences, Bingham University, Karu, Nasarawa State, Nigeria)

  • Aiyedogbon O. John

    (Department of Economics, Faculty of Social Sciences, Bingham University, Karu, Nasarawa State, Nigeria)

  • Aigbedion Marvelous

    (Department of Economics, Faculty of Social Sciences, Bingham University, Karu, Nasarawa State, Nigeria)

Abstract

This paper investigates the impact of monetary policy on food, beverages and tobacco output in Nigeria, focusing on the relationship between key monetary variables(monetary policy rate, exchange rate, money supply, inflation and manufacturing sector credit) and manufacturing output of the food, beverages and tobacco. Employing a long-run Autoregressive distributed lag model, the analysis reveals that the exchange rate insignificantly influences food, beverages and tobacco, with an appreciation leading to a substantial increase in food, beverages and tobacco output volumes. The paper revealed that money supply positively impacts food, beverages and tobacco, underscoring the importance of adequate liquidity in facilitating manufacturing activities. Conversely, the inflation rate, despite its association with higher borrowing costs, exhibits a positive relationship with food, beverages and tobacco, suggesting that an active economy may enhance manufacturing performance. On the other hand, the monetary policy rate is shown to have a negative impact on food, beverages and tobacco, indicating that tighter monetary policy can dampen manufacturing by increasing the cost of borrowing and restricting liquidity. The findings suggest that policymakers need to strike a balance between controlling inflation and fostering a manufacturing-friendly environment. Stability in the exchange rate, sufficient money supply, and accessible credit markets are recommended to support robust food, beverages and tobacco output in Nigeria.

Suggested Citation

  • Elizabeth Obiaje & Aiyedogbon O. John & Aigbedion Marvelous, 2024. "Impact of Monetary Policy on Food, Beverages and Tobacco Output in Nigeria: 2000-2023," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(12), pages 3806-3822, December.
    • Handle: RePEc:bcp:journl:v:8:y:2024:i:12:p:3806-3822
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    References listed on IDEAS

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    1. Ezu, Gideon Kasie PhD & Ukoh, Josephine.E, PhD, 2021. "Monetary Policy Instruments and Performance of Nigeria Capital Market," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(11), pages 720-726, November.
    2. Abiola John Asaleye & Rotdelmwa Filibus Maimako & Adedoyin Isola Lawal & Henry Inegbedion & Olabisi Popoola, 2021. "Monetary Policy Channels and Agricultural Performance: Evidence from Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(3), pages 205-218, March.
    3. World Health Organization, 2015. "WHO report on the global tobacco epidemic, 2015: Raising taxes on tobacco," University of California at San Francisco, Center for Tobacco Control Research and Education qt1fh1f32m, Center for Tobacco Control Research and Education, UC San Francisco.
    4. Abdullah Mohammed Almalki & Khaled Ibrahim Batayneh, 2015. "The relationship between inflation and financial development in Saudi Arabia," Journal of Developing Areas, Tennessee State University, College of Business, vol. 49(6), pages 321-332, Special I.
    5. Rizgar Abdlkarim Abdlaziz & Khalid Abdul Rahim & Peter Adamu, 2016. "Oil and Food Prices Co-integration Nexus for Indonesia: A Non-linear Autoregressive Distributed Lag Analysis," International Journal of Energy Economics and Policy, Econjournals, vol. 6(1), pages 82-87.
    6. Abiola John Asaleye & Rotdelmwa Filibus Maimako & Adedoyin Isola Lawal & Henry Inegbedion & Olabisi Popoola, 2021. "Monetary Policy Channels and Agricultural Performance: Evidence from Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(3), pages 205-218.
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