Comparative Analysis Of The Impact Of Monetary And Income Policies On The Growth Of The Nigerian Economy
George-Anokwuru Chidinma Chioma B
Department of Economics, Faculty of Social Sciences University of Port Harcourt, Nigeria
Obayori Joseph Bidemi
Department of Economics, Faculty of Social Sciences, Nnamdi Azikiwe University, Awka, Nigeria
Keywords: Monetary Policy, Income Policy, Money Supply, Exchange Rate, Wage Increase
Abstract
: This paper examined a comparative analysis of the impact of monetary and income policies on economic growth in Nigeria from 1985-2018 with the use of co-integration and Dynamic Ordinary Least Square (DOLS) techniques. Secondary data from Central Bank of Nigeria statistical bulletin collected on wage increase, price control, exchange rate, broad money supply and real gross domestic product (GDP) were used for the analysis. The pre-tests results via the ADF unit root test showed that the variables were integrated of order I(1) and I(0). The Johansen co-integration test showed that all the variable jointly exhibited co-integrating/long run relationships.The DOLS result showed that the value of wage increase (WG) has a positive but insignificant impact on economic growth. Also, the coefficient of price control (PC) is negatively signed to GDP but statistically not significant. The coefficient of exchange rate (EX) is positively signed and statistically significant with economic growth. Also, the coefficient of broad money supply (MS) is positively signed and statistically significant with economic growth. In conclusion, both monetary and income policies serves as a driver of economic growth. But comparatively, monetary policy measured by exchange rate and broad money supply impacted more on the growth of the Nigerian economy during the period of study than income policy, measured by wage increase and price control. Based on the empirical findings, the paper recommended that; government should put up price control mechanism that will fix minimum and maximum price for consumers goods and as well checkmate the wages in the labour market in order to prevent the occurrence of high inflation. Also, monetary policy management should ensure that a unify exchange rate system that help to drive the productive activities of the economy and as well ensured to minimize artificial scarcity in order to guarantee effective operation of foreign exchange activities. More so, monetary policy authorities should ensure a moderate level of broad money supply in order to avoid inflation driven economy which will be inimical to economic growth