Impact of Monetary Policy on Food, Beverages and Tobacco Output in Nigeria: 2000-2023

Elizabeth Obiaje, Aiyedogbon O. John and Aigbedion Marvelous
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Elizabeth Obiaje: Department of Economics, Faculty of Social Sciences, Bingham University, Karu, Nasarawa State, Nigeria
Aiyedogbon O. John: Department of Economics, Faculty of Social Sciences, Bingham University, Karu, Nasarawa State, Nigeria
Aigbedion Marvelous: Department of Economics, Faculty of Social Sciences, Bingham University, Karu, Nasarawa State, Nigeria

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 12, 3806-3822

Abstract: This paper investigates the impact of monetary policy on food, beverages and tobacco output in Nigeria, focusing on the relationship between key monetary variables(monetary policy rate, exchange rate, money supply, inflation and manufacturing sector credit) and manufacturing output of the food, beverages and tobacco. Employing a long-run Autoregressive distributed lag model, the analysis reveals that the exchange rate insignificantly influences food, beverages and tobacco, with an appreciation leading to a substantial increase in food, beverages and tobacco output volumes. The paper revealed that money supply positively impacts food, beverages and tobacco, underscoring the importance of adequate liquidity in facilitating manufacturing activities. Conversely, the inflation rate, despite its association with higher borrowing costs, exhibits a positive relationship with food, beverages and tobacco, suggesting that an active economy may enhance manufacturing performance. On the other hand, the monetary policy rate is shown to have a negative impact on food, beverages and tobacco, indicating that tighter monetary policy can dampen manufacturing by increasing the cost of borrowing and restricting liquidity. The findings suggest that policymakers need to strike a balance between controlling inflation and fostering a manufacturing-friendly environment. Stability in the exchange rate, sufficient money supply, and accessible credit markets are recommended to support robust food, beverages and tobacco output in Nigeria.

Date: 2024
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