Impact of Monetary Factors on Nigeria's Economic Growth

Studying the impact of monetary factors on Nigeria’s economic growth has become imperative in the face of the challenges of excess liquidity, poor access to credit, high cost of capital, inflation, and decreasing rate of economic growth. Hence this paper applied econometric modeling in the development of a prediction model for economic growth using critical indices of monetary policy. The results show that there is a significant relationship between money supply, foreign exchange rate and economic growth in Nigeria. However, the possibility of convergence of short-run dynamics of monetary policy factors to long-run equilibrium in economic growth was established. Though, the speed of adjustment with respect to foreign exchange rate was observed to be slow. Keywords: Cumulative density function, PP Test, Granger causality, Monetary Factors, Exchange rate, money supply