Does Policy Switching Matter in Determining Output in Nigeria?
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Nigerian Journal of Contemporary Public Policy Issues
This study examines the performance of Nigeria’s economy under the interest rate, exchange rate and price stability regime in the Pre-SAP, Post-SAP before democratic dispensation; and Post-SAP during democratic dispensation. It leans on the assumptions of the McKinnon-Shaw theory. The study employs the Chow test and Quandt-Andrews Unknown Breakpoint Test to establish that there were truly varying regimes as stated above. Descriptive analyses are used in this study to understand the nature of various monetary policy regimes in Nigeria. Also, ARDL model was used to examine the overall impact of monetary policy on Nigerian since her independence and OLS was used to determine the effect of various monetary policy regimes in Nigeria. It was discovered that exchange rate policy and the interest rate fixing policy adopted in Nigeria since her independence on average, enhanced the economy. Also, exchange rate policy and interest rate policy which are components of macroeconomic policy have significant impact on economic growth in the first regime (Pre-SAP; 1960-1985). However, monetary policy regime in period 2 (Post-SAP before Democratic Dispensation; 1986-1999) was ineffective but monetary policy was effective in this third regime (Post-SAP after Democratic Dispensation; 2000-2015). We, therefore recommend that the government should develop various palliative measures in order to counter the short run shocks that might arise while implementing monetary policy.
Monetary policy regimes , Chow test , ARDL , Quandt-Andrews unknown breakpoint test , Marshall-Lerner conditions , Purchasing Power Parity
Odeleye, A.T. & Iwegbu, O. (2016). Does Policy Switching Matter in Determining Output in Nigeria. Nigerian Journal of Contemporary Public Policy Issues, 10(1), 1 – 30.