To reconcile the lack of consensus on the appropriate concept of money in Nigeria using a 45 year time series data from 1970 – 2014 and employing the Ordinary Least Squares (OLS) estimation techniques to estimate two equations for both monetary aggregates (M1 and M2).
Findings shows that the principal explanatory variable (GDP) on both models has a positive and significant impact on both monetary aggregates, but the impact was more felt in the broad money supply measure (M2). It was concluded that the broad money supply measure defines the appropriate concept of money in Nigeria.
Table of Contents
1.1 BACKGROUND TO THE STUDY
1.2 STATEMENT OF THE PROBLEM:
1.3 OBJECTIVES OF THE STUDY
1.4 SCOPE OF THE STUDY
1.5 SIGNIFICANT OF THE STUDY
1.6 ORGANISATION OF THE STUDY
2.0 LITERATURE REVIEW
2.1 THE CONCEPT OF MONEY
2.2 THE CONCEPT OF MONEY SUPPLY
2.3 MONEY SUPPLY MEASURES
2.4 THE MONEY SUPPLY MEASURE “M1”
2.5 THE MONEY SUPPLY MEASURE “M2”
2.6 EMPIRICAL LITERATURE
3.0 METHODOLOGY
3.1 MODEL SPECIFICATION
3.2 ESTIMATION AND VALIDATION OF THE MODELS
3.3 SOURCES OF DATA
3.4: LIMITATIONS
4.0 PRESENTATION AND ANALYSIS OF RESULTS
4.1 PRESENTATION OF RESULTS
5.0: SUMMARY AND CONCLUSION
5.1: SUMMARY
5.2: CONCLUSION
Objectives and Core Topics
The primary objective of this study is to determine the most appropriate concept of money for the Nigerian economy by analyzing the impact of key macroeconomic variables on both narrow (M1) and broad (M2) money supply measures using time series data from 1970 to 2014.
- Evolution of money supply concepts in Nigeria
- Comparative analysis of M1 and M2 monetary aggregates
- Econometric modeling of macroeconomic influences (GDP, Interest Rate, Inflation)
- Evaluation of financial sector development and monetary policy
- Identification of the optimal money supply measure for economic planning
Excerpt from the Book
1.1 BACKGROUND TO THE STUDY
Everyone uses money. We all want it, work for it and think about it. Some go the extra mile of violently and illegally dispossessing others for it. Money has been and would be the obsession of many. The engine and oil of modern economies the world over is money.
From the ancient times, the concept, meaning and supply of money has evolved as societies are transformed. Hence, with the phasing out of trade by barter – a system of exchange of goods for goods, different commodities have defined the concept of money even up to the money period. Commodities like salt, cowries, stones, metals, gold etc. have served as money.
In modern times, gold, coins, paper notes etc. have already constituted the main form of money. Money supply simply refers to the amount of money in an economy (Obafemi, etal; 2009). What constitutes money supply in one economy is different from that of other countries. It means the appropriate concept of money in Nigeria is much different from that of developed countries for example; the United States of America and the United Kingdom. This difference lies in the relative development of the financial sector and financial instruments in the different economies (Anayo; 2005).
Summary of Chapters
1.1 BACKGROUND TO THE STUDY: Provides an overview of the evolution of money and defines the context of money supply as an essential component for modern economies.
1.2 STATEMENT OF THE PROBLEM: Highlights the lack of consensus regarding the appropriate concept of money in Nigeria following economic liberalization.
1.3 OBJECTIVES OF THE STUDY: Outlines the goal to determine the appropriate measure of money in Nigeria by evaluating macroeconomic impacts on M1 and M2.
1.4 SCOPE OF THE STUDY: Defines the focus on the Nigerian financial sector and the specified time period from 1970 to 2014.
1.5 SIGNIFICANT OF THE STUDY: Explains the contribution of the research to existing literature and policy formulation in Nigeria.
1.6 ORGANISATION OF THE STUDY: Describes the structural layout of the research paper.
2.0 LITERATURE REVIEW: Reviews both theoretical definitions of money and empirical studies on monetary aggregates.
3.0 METHODOLOGY: Details the ex post facto research design and the use of Ordinary Least Squares (OLS) regression analysis.
4.0 PRESENTATION AND ANALYSIS OF RESULTS: Presents the regression outputs and assesses the relationship between variables.
5.0: SUMMARY AND CONCLUSION: Summarizes the study's findings and concludes that M2 is the more appropriate concept of money in Nigeria.
Keywords
Money Supply, Nigeria, M1, M2, Monetary Aggregates, GDP, Ordinary Least Squares, Econometrics, Interest Rate, Inflation, Financial Development, Monetary Policy, Macroeconomic Variables, Central Bank of Nigeria
Frequently Asked Questions
What is the core focus of this research?
The research examines the definition of money supply within the Nigerian economy, aiming to identify whether the narrow measure (M1) or the broad measure (M2) is more appropriate.
What are the central themes discussed in the paper?
Key themes include the evolution of monetary concepts, the impact of liberalization on the Nigerian financial sector, and the econometric relationship between money supply and macroeconomic indicators.
What is the main objective of the study?
The broad objective is to determine the most appropriate concept of money in Nigeria by analyzing the sensitivity of monetary aggregates to changes in GDP, interest rates, and inflation.
Which scientific methodology is utilized?
The study employs an ex post facto research design and uses the Ordinary Least Squares (OLS) estimation technique to analyze multiple regression equations.
What does the main body of the work cover?
The main body covers the theoretical literature on money, the specification of regression models, and a detailed presentation and analysis of empirical results derived from Central Bank of Nigeria data.
Which keywords best characterize this work?
The work is best characterized by terms such as Money Supply, M1, M2, Nigeria, GDP, Ordinary Least Squares, and Monetary Policy.
How does the broad measure of money (M2) compare to the narrow measure (M1) in terms of impact?
The study finds that while GDP significantly impacts both measures, the impact is felt more significantly on the broad money supply measure (M2), leading to the conclusion that M2 is more appropriate.
What role does the Central Bank of Nigeria (CBN) play in the context of this study?
The CBN provides the official measures of money supply and the statistical data used for the econometric analysis covering the years 1970 to 2014.
- Quote paper
- Micah Effiong (Author), 2016, Monetary policy. Empirical Determination of the Concept of Money in Nigeria Using Both Narrow and Broad Concept of Money (M1 and M2), Munich, GRIN Verlag, https://www.hausarbeiten.de/document/509439
