Impact Of Monetary Policy On Foreign Trade In Nigeria : Current School News

Impact Of Monetary Policy On Foreign Trade In Nigeria

Filed in Current Projects, Economics Project Topic by on October 20, 2020

Impact Of Monetary Policy On Foreign Trade In Nigeria

ABSTRACT

The impact of monetary policy on foreign trade in Nigeria was examined for a period of 31 years (1985-2016). The variables used for conducting this empirical analysis were Gross Domestic Products, Foreign Direct investment flow, money supply, exchange rate, interest rate and total trade.

The ordinary least square (OLS) methodology was employed for this purpose.  The ADF unit root test was employed to test the stationarity of the variables.

The study found out at 5% level of significance that Exchange Rate (EXR) had a negative and significant relationship on the economic growth of Nigeria during the period of study.

Foreign Direct Investment Flow (FDIF) had a positive and significant relationship on the economic growth of Nigeria during the period of study.

Total Trade (TOTR) had a positive and insignificant relationship with economic growth of Nigeria during the period of study.

INTRODUCTION

Monetary policy is one of the key drivers of economic growth through its impact on economic variables. Economic growth is essential in an economy as it reduces poverty as well as improving livelihoods.

The growing importance of monetary policy has made its effectiveness in influencing economic growth a priority to most governments.

Despite the lack of consensus among economists on how monetary policy actually works and on the magnitude of its effect on the economy, there is a remarkable strong agreement that it has some measure of effects on the economy (Nkoro, 2005)

Monetary policy is a combination of measures designed to regulate the value, supply and cost of money in an economy, in consonance with the expected level of economic activity (Folawewo and Osinubi, 2006).

REFERENCES

Adenikinju  (2005). Trade and Growth: The Nigerian Experience World Development, vol. 7, pp. 73 -79

Ajayi F. J., (2014). African Imperatives in the New World Trade Order: Country study of the manufacturing sector in Nigeria.

Akanni K. J., (2007). Import Policy of a Developing Economy, Chugh Publications, Allahabad, India.

Ann Harrison (1991). International trade and the equalisation of factor prices, Economic Journal, vol. 58, pp. 163-184.

Asher, Ogbokor, (1970) Oil and Economic Growth: An Econometric Analysis J Development Alternatives and Area Studies.

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