ABSTRACT
One can hardly find a country without monetary policy. As a
matter of fact, monetary policy has gained a solid ground in
the Nigerian economy. However, in light of various economic
problems in Nigeria, it would seem the benefits of monetary ABSTRACT
One can hardly find a country without monetary policy. As a
matter of fact, monetary policy has gained a solid ground in
the Nigerian economy. However, in light of various economic
problems in Nigeria, it would seem the benefits of monetary
policy are yet to be fully harnessed. The purposed of this study
is to analyse the impact of monetary policy with Nigeria being
the case study. With regards to the data analysis, regression
analysis was applied. The study covers the effectiveness of
monetary policy from the period 1985 to 2011. The study
revealed that the level of effectiveness of monetary policy is
highly influenced by the Central Bank of Nigeria (CBN).
TABLE OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research questions
1.5 Research hypothesis
1.6 Significance of the study
1.7 Scope and limitation of the study
CHAPTER TWO: LITERATURE REVIEW
2.1 Literature review
2.2 Theoretical literature
2.3 Empirical literature
2.4 Limitation of the previous studies
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
3.2 Method of data analysis
3.3 Model specification
3.4 sources of data collection
3.5 justification of data collection
3.6 Evaluation technique
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF RESULTS
4.1 Presentation and interpretation of results
4.2 economic a priori criteria
4.3 Statistical criteria (First-order test)
4.4 Econometrics criteria
CHAPTER FIVE: SUMMARY, RECOMMENDATIONS, AND
CONCLUSION
5.1 Summary
5.2 Recommendations
5.3 Conclusion
Bibliography
Appendices
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
One of the major issues which have occupied the mind of government
for years is the impact of monetary policy as a tool for price stability in
Nigeria. Despite the lack consensus amongst the economy, there is
remarkable strong agreement that monetary policy as an economy-
stabilizing measure in Nigeria refers to the persistence rise in the
general price level.
Monetary policy is one of the macroeconomic policies available for
managing the economy. It is however important today because its
effects on economic aggregates such as price, output, interest rates and
exchange rates. In most countries, the central bank is saddled with the
responsibility of conducting monetary policy. In the case of Nigeria, the
responsibility entirely lies with the Central Bank of Nigeria (CBN). The
discretionary control of the money stock by the monetary authority
involves the expansion and contraction of money, influencing interest
rate to make money cheaper or more expensive depending on the
prevailing economic situation.
1.2 STATEMENT OF THE PROBLEM
The monetary policy implemented in the economy over the past years
has been detrimental and inconsistent with developmental needs of the
economy (Apata J.T, 2007). This concern has exerted pressures on the
monetary authorities in Nigeria to re-examine and re-evaluate their
monetary policies with the view of finding possible solutions. As a result
of this, the Structural Adjustment Programme (SAP) as introduced in
Nigeria in 1986 in order to correct the structural imbalances in the
economy and to liberalize the financial system.
Despite various actions used by the monetary authorities in
administering monetary policy in Nigeria, there are still limits to the
effectiveness of monetary policy. There has been a wide discrepancy
between target and outcome due to the fact that the central bank has
not been able to achieve the various objectives it set out for itself. For
instance, there has been a problem hitting inflation target. The
inflation target in 2008 was 7% but the performance was about 19%.
Nigeria needs an effective, efficient, sound and consistent monetary
policy that has a positive effect on interest rate, employment and real
output, so as to minimize the economic problems disturbing Nigeria as a
developing country
1.3 RESEARCH QUESTIONS
What is the effect of monetary policy on price stability in Nigeria?
To what extent do the instruments of monetary policy control
inflation in Nigeria?
What are the contributions of monetary policy towards developing
Nigeria?
1.4 OBJECTIVES OF THE STUDY
This study seeks to achieve the following objectives;
I. To determine the impact of monetary policy on inflation in
Nigeria.
II. To empirically examine the effectiveness of monetary policy on
economic stability in Nigeria.
III. To analyze the contributions of monetary policy towards
promoting growth and development of the Nigerian economy.

1.5 RESEARCH HYPOTHESIS
The hypothesis to be tested in the course of this research work is stated
below;
H1 = Monetary policy has significant impact on inflation in Nigeria.
H2 = Monetary policy has no significant impact on inflation in Nigeria.
1.6 SIGNIFICANCE O THE STUDY
This study is significant in the following ways;
I. It would provide an objective view of the effectiveness of the
monetary policy in Nigeria.
II. It would provide an economic basis upon which to examine the
effect of monetary policy on the Nigerian economy.
III. It would provide policy recommendations to the policy makers
on ways to make the Nigeria economy vibrant through the
monetary policy.
1.7 SCOPE OF THE STUDY / LIMITATION OF THE STUDY
This study will focus on major growth and development components
which are vital parts of monetary policy. The study will also empirically
examine the effectiveness of monetary policy in the Nigerian economy.
Factors that affect smooth execution of the project include inadequate
finance and short time.
policy are yet to be fully harnessed. The purposed of this study
is to analyse the impact of monetary policy with Nigeria being
the case study. With regards to the data analysis, regression
analysis was applied. The study covers the effectiveness of
monetary policy from the period 1985 to 2011. The study
revealed that the level of effectiveness of monetary policy is
highly influenced by the Central Bank of Nigeria (CBN).
TABLE OF CONTENTS
Title page
Approval page
Dedication
Acknowledgement
Abstract
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research questions
1.5 Research hypothesis
1.6 Significance of the study
1.7 Scope and limitation of the study
CHAPTER TWO: LITERATURE REVIEW
2.1 Literature review
2.2 Theoretical literature
2.3 Empirical literature
2.4 Limitation of the previous studies
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction
3.2 Method of data analysis
3.3 Model specification
3.4 sources of data collection
3.5 justification of data collection
3.6 Evaluation technique
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF RESULTS
4.1 Presentation and interpretation of results
4.2 economic a priori criteria
4.3 Statistical criteria (First-order test)
4.4 Econometrics criteria
CHAPTER FIVE: SUMMARY, RECOMMENDATIONS, AND
CONCLUSION
5.1 Summary
5.2 Recommendations
5.3 Conclusion
Bibliography
Appendices
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
One of the major issues which have occupied the mind of government
for years is the impact of monetary policy as a tool for price stability in
Nigeria. Despite the lack consensus amongst the economy, there is
remarkable strong agreement that monetary policy as an economy-
stabilizing measure in Nigeria refers to the persistence rise in the
general price level.
Monetary policy is one of the macroeconomic policies available for
managing the economy. It is however important today because its
effects on economic aggregates such as price, output, interest rates and
exchange rates. In most countries, the central bank is saddled with the
responsibility of conducting monetary policy. In the case of Nigeria, the
responsibility entirely lies with the Central Bank of Nigeria (CBN). The
discretionary control of the money stock by the monetary authority
involves the expansion and contraction of money, influencing interest
rate to make money cheaper or more expensive depending on the
prevailing economic situation.
1.2 STATEMENT OF THE PROBLEM
The monetary policy implemented in the economy over the past years
has been detrimental and inconsistent with developmental needs of the
economy (Apata J.T, 2007). This concern has exerted pressures on the
monetary authorities in Nigeria to re-examine and re-evaluate their
monetary policies with the view of finding possible solutions. As a result
of this, the Structural Adjustment Programme (SAP) as introduced in
Nigeria in 1986 in order to correct the structural imbalances in the
economy and to liberalize the financial system.
Despite various actions used by the monetary authorities in
administering monetary policy in Nigeria, there are still limits to the
effectiveness of monetary policy. There has been a wide discrepancy
between target and outcome due to the fact that the central bank has
not been able to achieve the various objectives it set out for itself. For
instance, there has been a problem hitting inflation target. The
inflation target in 2008 was 7% but the performance was about 19%.
Nigeria needs an effective, efficient, sound and consistent monetary
policy that has a positive effect on interest rate, employment and real
output, so as to minimize the economic problems disturbing Nigeria as a
developing country
1.3 RESEARCH QUESTIONS
What is the effect of monetary policy on price stability in Nigeria?
To what extent do the instruments of monetary policy control
inflation in Nigeria?
What are the contributions of monetary policy towards developing
Nigeria?
1.4 OBJECTIVES OF THE STUDY
This study seeks to achieve the following objectives;
I. To determine the impact of monetary policy on inflation in
Nigeria.
II. To empirically examine the effectiveness of monetary policy on
economic stability in Nigeria.
III. To analyze the contributions of monetary policy towards
promoting growth and development of the Nigerian economy.

1.5 RESEARCH HYPOTHESIS
The hypothesis to be tested in the course of this research work is stated
below;
H1 = Monetary policy has significant impact on inflation in Nigeria.
H2 = Monetary policy has no significant impact on inflation in Nigeria.
1.6 SIGNIFICANCE O THE STUDY
This study is significant in the following ways;
I. It would provide an objective view of the effectiveness of the
monetary policy in Nigeria.
II. It would provide an economic basis upon which to examine the
effect of monetary policy on the Nigerian economy.
III. It would provide policy recommendations to the policy makers
on ways to make the Nigeria economy vibrant through the
monetary policy.
1.7 SCOPE OF THE STUDY / LIMITATION OF THE STUDY
This study will focus on major growth and development components
which are vital parts of monetary policy. The study will also empirically
examine the effectiveness of monetary policy in the Nigerian economy.
Factors that affect smooth execution of the project include inadequate
finance and short time.