Evaluation of Monetary Policy Outcomes and Its Effect on Price Stability in Nigeria

Abstract

This study examined the effect of monetary policy outcomes on macroeconomic stability in Nigeria. Data was gathered for a time frame of 1985 to 2010 from the CBN statistical bulletin. A simplified ordinary least squared technique stated in multiple forms was applied to the data after ensuring data stationarity. At 5% significant level, none of the variables are statistically significant. The insignificant statistics between monetary policy, gross domestic product, credit to the private sector, net credit to the government and inflation in Nigeria, suggest that monetary policy as a policy option may have been inactive in influencing price stability. These considerations suggest that sound fiscal policies will be an important component of the policy mix if the move to price stability is to be sustained and credible.

Keywords: Monetary policy; price stability; fiscal policy; money supply.