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The Covid-19 Pandemic And Implications For Monetary Policy In Nigeria: A Simulation Study

Author

Listed:
  • SAMUEL O. OLOFIN

    (Centre for Econometric and Allied Research, University of Ibadan, Ibadan, Nigeria)

  • ADEBAYO M. ADEBIYI

    (��Research Department, Central Bank of Nigeria, Abuja, Nigeria)

  • AFEES A. SALISU

    (Centre for Econometric and Allied Research, University of Ibadan, Ibadan, Nigeria)

  • OLUSANYA E. OLUBUSOYE

    (Centre for Econometric and Allied Research, University of Ibadan, Ibadan, Nigeria)

  • ADENIYI O. ADENUGA

    (��Research Department, Central Bank of Nigeria, Abuja, Nigeria)

Abstract

This study complements the emerging literature on the COVID-19 pandemic and provides direction, in the case of Nigeria, for targeting monetary policy response to mitigate the pandemic’s economic consequences. We simulate three scenarios: (i) do-nothing; (ii) reduce MPR gradually and (iii) reduce MPR drastically; amidst falling oil prices. The do-nothing scenario, although inflationary, would produce a marginal appreciation of the Naira/USD exchange rate. Gradual or drastic reduction of MPR would deliver relative price stability, but will undermine exchange rate stability and deplete external reserves. MPR should optimally not be reduced below 12% in response to the economic effect of the pandemic.

Suggested Citation

  • Samuel O. Olofin & Adebayo M. Adebiyi & Afees A. Salisu & Olusanya E. Olubusoye & Adeniyi O. Adenuga, 2024. "The Covid-19 Pandemic And Implications For Monetary Policy In Nigeria: A Simulation Study," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 69(02), pages 591-618, March.
    • Handle: RePEc:wsi:serxxx:v:69:y:2024:i:02:n:s0217590821410046
    DOI: 10.1142/S0217590821410046
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    More about this item

    Keywords

    COVID-19; monetary policy; modeling; Nigeria;
    All these keywords.

    JEL classification:

    • I19 - Health, Education, and Welfare - - Health - - - Other
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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