MONETARY POLICY AND MACROECONOMIC VARIABLE PERFORMANCES IN NIGERIA; BOUNDS TEST, ARDL AND ECM APPROACH

Abstract

The aim of this study is to examine the relationship between monetary policy and performances of macroeconomic variables in Nigeria. Data were collected from the Central Bank of Nigeria Statistical Bulletin. Bounds Test ECM and ARDL model was utilized to address the objective of this study. Consequently, the findings from the study showed that monetary policy and exchange rate have a positive relationship in both short run and long run. Similarly, monetary policy and inflation rate have an insignificant negative relationship in the short run, but reverse is the case in the long run. However, monetary policy and real GDP have an insignificant negative relationship with each other in the short run meanwhile, the relationship becomes positive in the long run. This paper makes the following vital policy recommendations for the, policy makers in Nigeria that as a matter of urgency the monetary authorities should embark on contrtionary monetary policy