MONETARY POLICY OPERATION IN NIGERIA FROM 1980 TO 2016

The study examines monetary policy operations and economic growth in Nigeria from 1980 to 2013. The purpose is to expose the impact of monetary policy operations on Nigeria?s economic growth. The data for the study were sourced from CBN statistical bulletin. The econometric methods of OLS, Co-integration and Error Correction Mechanism (ECM) were employed as the analytical tools. The result of the parsimonious ECM shows that the overall model is satisfactory given the coefficient of determination of 53 percent and f-statistics of 2.150790. In addition, the variables of monetary policy (proxied by exchange rate, interest rate and money supply) are rightly signed. However, it was discovered that out of the explanatory variables, only interest rate was statistically significant at 5% level of significance in stimulating economic growth in Nigeria. Furthermore, the long run dynamic result also shows that there exists a long-run relationship or equilibrium among the variables. This is because the coefficient of ECM is rightly signed (that is negative) but statistically insignificant. Meaning that, the short run dynamics adjust to long run equilibrium relationship. Based on the findings, the study therefore suggests that monetary authority should review her exchange rate, interest rate and money supply policies so that the country?s capability to produce the goods and services its people want will be increased. Moreover, government/monetary authorities should promote activities in all the sectors of the economy particularly the agricultural and industrial sector to enhance output and reduce the rate of dependence on foreign goods. There should be co-operation between the monetary and fiscal authorities to ensure smooth co-ordination and consistency in monetary and fiscal pursuits.