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MONEY SUPPLY AND INFLATION IN A GROWING ECONOMY: THE NIGERIAN EXPERIENCE

Abeng Magnus Okoi (), Itodo Idoko Ahmed and Nwafor Nwamaka Georgina
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Abeng Magnus Okoi: Central Bank of Nigeria, Abuja, Nigeria
Itodo Idoko Ahmed: Central Bank of Nigeria, Abuja, Nigeria
Nwafor Nwamaka Georgina: Central Bank of Nigeria, Abuja, Nigeria

West African Journal of Monetary and Economic Integration, 2018, vol. 18, issue 2, 28-46

Abstract: This study revisited the traditional money supply - inflation nexus, presented in Fisher’s equation, but relaxed its basic assumption of constant level of output, within the context of the Nigerian economy. The idea was to reveal the level of asymmetry in this relationship under conditions of varying levels of economic growth, at every given level of money supply growth. The study drew inferences from the estimate of a two-regime Threshold Autoregressive Distributed Lag (TARDL) Model, and concluded that, while money supply has positive and statistically significant impact on inflation during periods of “low economic growth†, the impact is, however, negative and statistically significant in a regime of “high economic growth†.

Keywords: Money Supply; Inflation; Economic Growth; Regime-switching; Threshold Regression. (search for similar items in EconPapers)
JEL-codes: C24 C50 E31 E51 E52 (search for similar items in EconPapers)
Date: 2018
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