The Monetary Transmission Mechanism in Nigeria: a Sectoral Output Analysis

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International Journal of Economics and Finance

Vol. 4, No. 1; January 2012

The Monetary Transmission Mechanism in Nigeria: A Sectoral Output Analysis
Philip Ifeakachukwu, NWOSA (Correspondence author) Department of Economics, Accounting and Finance Bells University of Technology, Ota, Ogun State, Nigeria Tel: 234-082-470-7555 E-mail: nwosaphilip@yahoo.com

Muibi Olufemi, SAIBU Dept of Economics, Obafemi Awolowo University Ile-Ife, Osun State, Nigeria Tel: 234-085-338-1914 Received: May 31, 2011 doi:10.5539/ijef.v4n1p204
Abstract

E-mail: omosaibu@yahoo.com Published: January 1, 2012

Accepted: July 5, 2011

URL: http://dx.doi.org/10.5539/ijef.v4n1p204

The study investigated the transmission channels of monetary policy impulses on sectoral output growth in Nigeria for the period 1986 to 2009. Secondary quarterly data were used for the study while granger causality and Vector Auto-regressive Method of analysis were utilized. The results showed that interest rate channel was most effective in transmitting monetary policy to Agriculture and Manufacturing sectors while exchange rate channel was most effective for transmitting monetary policy to Building/Construction, Mining, Service and Wholesale/Retail sectors. The study concluded that interest rate and exchange rate policies were the most effective monetary policy measures in stimulating sectoral output growth in Nigeria.
Keywords: Sectoral output, Monetary transmission channels, Granger causality, VAR model 1. Introduction

The channels through which monetary policy impulse is being transmitted to the economy had been a subject of continuous discourse among academia’s and researchers given that an understanding of the transmission of monetary policy to real output is key for central bankers to conduct monetary policy effectively. While issues on monetary transmission…...

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