Sei sulla pagina 1di 11

THE EFFECTIVENESS OF MONETARY POLICY

IN CONTROLLING INFLATION IN
NIGERIA ECONOMY

BY

ASERUOMA PAUL UFUOMA


NOU110153975

B. SC. ENTREPRENEURIAL AND BUSINESS MANAGEMENT


NATIONAL OPEN UNIVERSITY OF NIGERIA
ASABA STUDY CENTRE
ABUJA, NIGERIA.

OCTOBER, 2017.

i
TITLE PAGE

THE EFFECTIVENESS OF MONETARY POLICY


IN CONTROLLINGINFLATION IN
NIGERIA ECONOMY

BY

ASERUOMA PAUL UFUOMA


NOU110153975

A RESEARCH PROJECT SUBMITTED TO THE


FACULTY OF MANAGEMENT SCIENCES
NATIONAL OPEN UNIVERSITY
OF NIGERIA.

IN PARTIAL FULFILLMENT OF THE REQUIREMENT


FOR THE AWARD OF BACHELORS DEGREE IN
ENTREPRENEURIAL AND BUSINESS MANAGEMENT
NATIONAL OPEN UNIVERSITY OF NIGERIA,
(ASABA STUDY CENTRE)
ABUJA, NIGERIA.

OCTOBER, 2017.

ii
DECLARATION

I Aseruoma Paul Ufuoma humbly declare that this work entitled: The

Effectiveness of Monetary Policy in Controlling Inflation in Nigeria Economy is as a

result of my research effort carried out in the Faculty of Management and Social

Sciences, National Open University of Nigeria, under the Supervision of Mr.

Lawrence Udoh I further wish to declare that, to the best of my knowledge and

belief, it contains no material previously published or written by another person nor

material which to a substantial extent has been accepted for the award of any other

degree or diploma of any university or other institute of higher learning, except where

due acknowledgement has been made in the text.

_______________________________
ASERUOMA PAUL UFUOMA

iii
CERTIFICATION

This is to certify that this research project entailed The Effectiveness of

Monetary Policy in Controlling Inflation in Nigeria Economy was carried out by

Aseruoma Paul Ufuoma in the Faculty of Management Sciences, National Open

University of Nigeria, Abuja for the award of Bachelor Degree in Entrepreneurial in

Business Management.

……………………………. …….……………...
…..
Mr. Lawrence Udoh Date
(Project Supervisor)

…………………………………
………………………
Dr. Ukwueze Augustine .C. Date
(Asaba Study Centre Director)

………………………………………………… …...…………………
Mr. Paul Akom Date
(Dean, Faculty of Management Science))

iv
DEDICATION

This project entitled Entrepreneurial and Business Management is dedicated

to God and Most especially my earthy parent and father Mr. Jones and my late

mother, mercy Aseruoma who gave me academic education and to all who were of

immense assistance to me during may study school period times God bless you all:

Amen.

v
ACKNOWLEDGEMENT

I Aseruoma Paul Ufuoma: first and foremost dedications this project work

entitled: The Effectiveness of Monetary Policy in Controlling Inflation in the Nigeria

Economy to my biological and earthly father: Mr. Jones Aseruoma - who saw it as a

must that I should be a graduate and be train professionally and academically in

higher institution, and most fortunately in National Open University of Nigeria Asaba

study centre- and to obtain a (B.Sc) Degree in Entrepreneurial & Business

Management as my course discipline with hard work and determination. And by the

grace of God- I had finish my course programme and study.

I acknowledge and appreciate both of my parents Mr. and Mrs. Jones &

Mercy Aseruoma for their contribution towards my academic pursuit & for making

me a graduate through their full financial support all through my school study. This

project work is dedicated to them and to God who kept me through out alive to see

each study day-tutor and exam day. That I came across; this study had left me with a

create experience of academic knowledge that had improve mine personal experience

as a Nigeria- to serve her in post of duty better with excellence.

Thanks also to God our father that made my academic dream and project

successful & accomplish, I would appreciate Noun University who gave me the

opportunity through other University- To study this course- Entrepreneurial &

Business Management as my discipline.

Thank you all once again and God bless you. Amen.

vi
ABSTRACT

Monetary policy is the summation of the economic action taken by regulatory


authorities in charge of regulating or managing the dynamic economic variable that
effect changes in the prices of goods and services and hence the value of money.
Usually these economic variables are grouped as short term macroeconomic factors
and include instruments like demand and of money, interest discount rates, volume of
credits size of deposit money institutions reserve. These instruments are so volatize
that their regulation and management have direct implication the prices stability
goal of macro economic authorities. Of course, it worth noting that the price
generally covers the value that goods and services as well as foreign exchange are
traded. Again the role of money in the control of inflation rages on between monetary
managers and policy makers of emerging economic etc in managing inflation. While
inflation is on economic condition in which money is demanded in the purchasing
power unit of money. Meaning a loss of real value in the medium of exchange and
unit of account within the economy. The implication of this finding is that some
monetary policy instruments are effective in management in managing inflation while
others are not. We therefore recommend that concretionary monetary policy aimed
at curtailing excess money in circulation should be used to moderate inflation in
Nigeria.

vii
TABLE OF CONTENTS

Title page - - - - - - - - - - i

Declaration - - - - - - - - - ii

Certification - - - - - - - - iii

Dedication - - - - - - - - - - iv

Acknowledgement - - - - - - - - v

Abstract - - - - - - - - - vii

Table of Contents - - - - - - - - viii

List of Tables - - - - - - - - xi

CHAPTER ONE

INTRODUCTION

1.1 Background of the study - - - - - - 1

1.2 Statement of the problem - - - - - - - 6

1.3 Objective of the study - - - - - - - 7

1.4 Statement of hypotheses - - - - - - - 8

1.5 Scope of the study - - - - - - - - 8

1.6 Significance of the study - - - - - - - 8

CHAPTER TWO

LITERATURE REVIEW

2.1 Conceptual Definition of Momentary Policy - - - - 9

2.2 Evolution of the Monetary Policy Framework in Nigeria. - - 10

viii
2.3 Review of monetary policy before the structural adjustment programme

(SAP). - - - - - - - - - 14

2.4 Monetary policies under the structural adjustment programme (SAP). - 16

2.5 Empirical literature review. - - - - - - 20

2.5.1 An appraisal of the performance of monetary policy in Nigeria. - 20

2.6 The effectiveness of monetary policy in targeting inflation in Nigeria. 27

2.7 Suggestion for dealing with inflation in Nigeria - - - 28

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Model specification - - - - - - - 32

3.2 Method of evaluation - - - - - - - 34

3.2.1 Unit roof test - - - - - - - - 34

3.2.2 Presentation of co-integration and error corrections - - - 34

3.2.3 Diagnostic Tests - - - - - - - - 34

3.3 Justification of the model - - - - - - - 35

3.4 Research approach - - - - - - - - 35

CHAPTER FOUR

PRESENTATION OF DATA AND DISCUSSION OF RESULTS

4.1 Presentation of data - - - - - - - - 36

4.1.1 Unit root test - - - - - - - - 36

4.2 Statistical criteria of the result - - - - - 40

4.2.1 T-test - - - - - - - - - 40

4.3 Econometric criteria - - - - - - - - 41

4.3.1 Test for Autocorrelation - - - - - - - 41

4.32 Normality Test - - - - - - - - 42

ix
CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATION

5.1 Summary - - - - - - - - - 45

5.2 Conclusion - - - - - - - - - 48

5.3 Recommendations - - - - - - - - 40

References - - - - - - - - - 51

Appendix - - - - - - - - - 53

Questionnaire - - - - - - - - 54

x
LIST OF TABLES

Table 4.1 Unit root test (ADF-Test) at level form - - - 36

Table 4.2 (ADF and critical values in absolute terms) - - - 37

Table 4.3 Testing for unit root at difference form - - - 38

Table 4.4 Regression result LGDP (dependent variable - - 39

Table 4.5: Economic opinion, interpretation/appriori criteria - - 40

Table 4.6: F-Statistics - - - - - - - - 41

Table 4.7: Test for Multicolliuanity - - - - - 43

Table 4.8: Short run model or dynamic model - - - - 43

xi

Potrebbero piacerti anche