Expansionary and concretionary fiscal policy

By so doing, future investment is discouraged and the rise in prices is checked, contrary wise, when reversionary forces start in the economy, they lend more investment, output, employment, income and demand rise and fall in price checked.

Monetary Policy in Nigeria – The Impact of Monetary Policy on Nigeria’s Economic Growth

Monetary and credit policy measures: This sector mainly provide service that are important for a modern economy. Transaction in security affects the relative prices and interest rates.

That is, it is a deliberate effort by the monetary authority the central bank to control the money supply and credit condition for the purpose of achieving certain broad economic objectives. Accelerated growth of Expansionary and concretionary fiscal policy money shows a sharp increase in narrow money M1 which was the target variable while M2 rose by The monetary and financial policies pursued in recent years have been designed to support the attainment of basic objective of the economic reform programme adopted in July to restore macro economic stability in the short term and induce the resumption of sustainable growth.

Since the rate of interest is the cost of credit. For example, Balogun used simultaneous equation model to test the hypothesis of monetary effectiveness in Nigeria, and found that-rather than promoting growth, domestic monetary policy was a source of stagnation and persistent inflation.

Other development is the progressive increase in the size of government budget deficits. The CBN in her holding regular dialogues with banks, commercial, merchant and industrial banks and agencies with a view to keeping them informed on current policy implementation, development and securing their co-operation on all aspects of monetary policy in order to enhance macro economic performance.

Ogwuma in his contribution said that when institutional frame work is in place, monetary policy is formulated by first appraising the current past and present and by making forecast- on the likely future trend in the absence of policy changes.

Exchange rate plays a key role in international economic transactions. Thus, if the Central Bank wants to reduce the volume of money in circulation because the economy is irking by inflation, it sells securities to be public for which the public pays by writing cheque favoring their deposit accounts.

It is with the view of annihilating these puzzles, that the researcher would apply unit root test and co-integration econometric model, in order to stationarize the data, and ascertain the long run relationship between monetary policy and economic growth in Nigeria.

Monetary policy involves measure designed to regulate and control the volume, cost, availability and direction of money and credit in an economy to achieve some specified macro-economic policy objectives. As a preview to understanding the monetary policies administered in Nigeria, I will briefly review the economic policy measures of that prevail in the country.

For example the objective of price stability and in the short-run, which may not be sustainable in the long-run.

The extent to which this level of development and growth are attained depends upon the resource available to the country. The mandatory special deposits are a major measure in reducing the deposits available for banks to lend to their customers.

This could be traced to the problems of inadequate legal frame work, attitude of the absence of good lending policies which paved way to skeptics, demise of experience, poor quality service and absence of qualified personnel.

There is contraction of credit and prices are checked from rising further. It generally refers to financial including monetary assets but there is in no need to regard it as excluding real assts.

This is because improvement in employment could only be attained at the curve in the cost of making inflation independent. The value of money depends on the confidence people have on it, that they exchange it for sale of goods and services whenever they want to do so.

The average saving deposit rate of commercial banks rose marginally from 6. The second stage is the development of forecast, aimed at determining the future forecast, aimed at determining the future course of the economy in the absence of policy change.

There was need to address basic elements of economic instability such as the expended government spending which resulted in large deficits. While economic growth may be said to concern itself with the effect of investment on raising potential income and hence causes changes in the living standard of the people.

High rate of employment ii.

Monetary Policy In Nigeria – The Role In Promoting Economic Stability In Nigeria

Albert, there was a significant drain in excess reserves, but underlying growth in primary money arising from government borrowing from CBN to finance deficit could not be totally removed by the volume of OMO attained during this period.

On the other hand, a reduction in reserve requirement release assets held for this purpose for lending as loans and advances by the banks.

Secondly, concretionary monetary policy occurs when the monetary authority reduce money supply in order to force up interest rate. This would in turn lead to a decline in investment and profit. This was from a result of the re-inflationary package of the particular year.

In pursuit of the above goals, the following specific policy measures were adopted: As noted by P. The monetarist led by friedman said that despite their differences still hold a strong view that: Thus, financial institutions particularly banks are now better able to protect their deposit base and to sustain their lending than they had been in the regulated frame work in which the volume of deposit was primarily determined.

The lending ceilings when placed, will limit the amount of found period of time that could be lent to the public by the commercial bank.Monetary Policy in Nigeria - Developing countries growth policies are better delivered as full packages since fiscal and monetary policies are inextri.

According to Aderibigbe (), monetary policy is a transmission mechanism which operates policy through the effects of interest of credit on economic agents which respond to different yields of various financial assets, level of aggregates demand, exchange rate overall economic activities.

Download
Expansionary and concretionary fiscal policy
Rated 0/5 based on 22 review