ESTIMATING THE EFFECT OF MONEY SUPPLY ON ECONOMY GROWTH

Adijat Bukola Aiyelabegan, Akeem Olanrewaju Adeoye and Sikiru Suleiman, Volume 1 Issue 2, December 2020 Pages 8-12, Published: 2020-12-24

Abstract

This study looked at the effect of money supply on the growth of Nigeria economy and the problem facing the implementation of the monetary policies in Nigeria between 2004 and 2017. The data used was obtained from Central Bank of Nigeria (CBN)’s 2018 statistical bulletin. The objective of this work is to empirically investigate the impact of the monetary variables associated with money supply on economic growth in Nigeria. The statistical technique used for this analysis is the Ordinary Least Square (OLS), and various tests such as Normality test, Multicollinearity, Homoscedasticity, Autocorrelation were carried out on the data to investigate whether OLS assumptions are meant. The test results revealed that all the assumption hold autocorrelation that was present in the error term, this was corrected using Cochran-Orcutt procedure. The results from the analysis indicate that the monetary variables; Board Money Supply (BMS) and Liquidity Ratio (LR) have a direct impact on the real Gross Domestic Product (GDP) in the model while the Cash Ratio (CR) is not