Is Monetary Policy a Veritable Tool for Tackling the Problem? Nigeria in Focus
Johnson A. Atan, Ubong E. Effiong & Joel I. Okon
Department of Economics
University of Uyo, Uyo
Email: ubongeffiong78@yahoo.com
ABSTRACT
This paper investigated the influence of monetary policy as a veritable tool for tackling the problem of unemployment in Nigeria. In doing this, the paper used time series data ranging from 1981 to 2017. The ordinary least squares (OLS) method was used in the analysis. The Augmented Dickey-Fuller (ADF) unit root test was employed in testing the stationarity property of the series and revealed that all the variables were stationary at first difference. This therefore necessitated the test for cointegration using the Johansen cointegration test of which both the Trace statistic and Max-Eigen statistic showed 2 and 1 cointegrating equation(s) respectively. This therefore justified the use of the Error Correction Mechanism (ECM) in the study. Findings of this paper showed that monetary policy rate (MPR), money supply (MS), Gross Domestic Product (GDP), and Credit to private sector (CPS) had an inverse and significant influence on unemployment in Nigeria within the study period. Also, the existence of cointegrating equations showed that there is a long run relationship between unemployment and the explanatory variables used in this study. It is from these findings that this paper recommended that emphasis should be laid on aggressively pursuing entrepreneurial development and increased productivity by focusing on investment, employment generation and economic growth that has mechanism to trickle down to the masses.
Key words: Monetary Policy, Unemployment, Economic Policies, Influence
