Advances in Management and Applied Economics

Effect of Monetary Policy on Food Inflation in Nigeria: A Nardl Structural Approach

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  • Abstract


    The relationship between Nigeria's monetary policy and food inflation has been experimentally examined in this study. A quantitative research method based on ex-post facto research design was adopted using the non-linear autoregressive distributed lag model approach (NARDL) in order to examine the impact of monetary policy on food inflation in Nigeria between the periods of 1980 and 2021. As a dependent variable, Food Inflation (FINF) was employed in the study. Exogenous variables also included Treasury Bills Rate (TBR), Exchange Rate (EXG), Monetary Policy Rate (MPR), and Broad Money Supply (M2). The study used time series data from the World Bank data repository (WDI), the National Bureau of Statistics, and the Central Bank of Nigeria's (CBN) Statistical Bulletin. Data analysis showed that the exchange rate significantly and negatively affects the price of food in Nigeria. Similar to this, empirical data demonstrates a long-run association between Nigeria's monetary policy rates and food inflation. Both the money supply and the monetary policy rate have a favorable impact on food inflation in Nigeria, which is both positive and significant. As a result, it was advised that Nigeria's monetary policy be set up so that the goals to be attained are clearly specified.


    JEL classification numbers: E31, E52, E51, C5.

    Keywords: Inflation, Monetary Policy, Money Supply, NARDL.