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Money Supply And Inflation In A Growing Economy: The Nigerian Experience

Author

Listed:
  • Abeng Magnus Okoi

    (Central Bank of Nigeria, Abuja, Nigeria)

  • Itodo Idoko Ahmed

    (Central Bank of Nigeria, Abuja, Nigeria)

  • Nwafor Nwamaka Georgina

    (Central Bank of Nigeria, Abuja, Nigeria)

Abstract

This study revisited the traditional money supply - inflation nexus, presented in Fisher’s equation, but relaxed its basic assumption of constant level of output, within the context of the Nigerian economy. The idea was to reveal the level of asymmetry in this relationship under conditions of varying levels of economic growth, at every given level of money supply growth. The study drew inferences from the estimate of a two-regime Threshold Autoregressive Distributed Lag (TARDL) Model, and concluded that, while money supply has positive and statistically significant impact on inflation during periods of “low economic growth†, the impact is, however, negative and statistically significant in a regime of “high economic growth†.

Suggested Citation

  • Abeng Magnus Okoi & Itodo Idoko Ahmed & Nwafor Nwamaka Georgina, 2018. "Money Supply And Inflation In A Growing Economy: The Nigerian Experience," West African Journal of Monetary and Economic Integration, West African Monetary Institute, vol. 18(2), pages 28-46, December.
    • Handle: RePEc:wam:journl:v:18:y:2018:i:2:p:28-46
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    More about this item

    Keywords

    Money Supply; Inflation; Economic Growth; Regime-switching; Threshold Regression.;
    All these keywords.

    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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