Impact Analysis of Money Neutrality on Economic Growth: Study of Developing Economy

Abstract

Monetary policy has been earliest measure of economic problem and as such money neutrality controversy in a developing economy like Nigeria has been the focal point of this paper. This paper aimed at investigating the impact analysis of money neutrality on the economic growth in Nigeria.. The data were obtained from the CBN statistical bulletin, 2011 and transformed. Econometrics techniques such as Phillips Perron, Johansen co integration, ECM and Granger Causality test were adopted to test the stationarity, co integration, ECM model estimation and the impact of money neutrality on the economic growth in Nigeria. The results revealed that the GDP and other variables were stationary at I(o). Total government expenditure has positive impact on economic growth. Money supplies inversely affect GDP. Finally, the TGE and TGE granger caused GDP. The study recommended that effort should be put in place to policy gearing towards spending on fiscal projects capable of enhancing economic growth in the developing countries.

Keywords: Granger Causality, Unit root, TGE, Monetary, GDP, ECM.