Get the complete project »
- The Complete Research Material is averagely 91 pages long and it is in Ms Word Format, it has 1-5 Chapters.
- Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
- Study Level: BTech, BSc, BEng, BA, HND, ND or NCE.
- Full Access Fee: ₦7,000
This study examined the relationship between Money Supply, Inflation andOutput level in Nigeria with view to ascertaining the existence or otherwise of the Tobin effect. To achieve this, the study employed the ARDL bound testing approach to cointegration on annual series of Money supply, CPI and real GDP growth rate from 1970-2016.After controlling for the observed structural breaks in the series using the dummy variable approach, the short run model shows that Money supplyexerts a positive impact on the output level by of 0.21% while inflation retards output by 0.11%. However, in the long run, both money supply and Inflation were found to have no significant impacton output level. This findings suggest the absence of Tobin effect in Nigeria. The study therefore recommends that:the monetary authority must fasten its braces against inflation as well as its money supply generating mechanisms. Also, in order to consolidate the short run gains in output achieved by the money supply through the long run, effort should be geared towards boosting the productive base in order to meet up with the increase in demand which will consequently tame inflation.
1.1 Background to the Study
The relationship between money supply, output and prices is a pertinent issue in
economics. It is a relationship that has prompted an unending probe by central bankers and
academicians from the time of the Classical quantity theorists in the 20th century to the
monetarists in the 1950-1960s to date. The classical economists view money supply as the only
factor responsible for inflation through the demand channel. They give more importance to
monetary policy in stabilizing the economy. The Keynesians on the other hand opine that when
thereis under unemployment in the economy an increase inthe money supply leads to an increase
in aggregate demand, output and employment only in the short-run (Hussain, Faarooq&Akram,
While the Classicals‟ view the aggregate supply (AS) curve as vertical as any increase in
money supply leads to increase in prices only, the Keynesians contend that, is an inverted L-
shape. As a result, in the long–run there is no effect of money and therefore, the Keynesians
recommend the use of fiscal policy in stabilizing the economy (Hussain, et.al. 2010).
According to Waliullah&Fazli-Rabbi (2011), all plausible economic explanations about
the relationship between money supply, output and prices have become a debate between two
major schools of thought, that is the Keynesian and monetarist schools of thought. According to
the Keynesians, in the Hicks-Hansen IS-LM model, money affects output positively through
changes in the rate of interest; i.e. changes in money stock are induced by changes in income and
not vice versa. In other words, Keynes believes that so long as there is unemployment, output
will change with a change in the quantity of money without affecting prices; and contrariwise
when there is full employment (Gatawa, Abdulgafar&Olarinde, 2017). On the other hand,
monetarists contend that money has a direct and proportional effect on output. However, in the
long-run its effect on income is neutralized, since prices change proportionally to change in
money leaving the real value of income unchanged.
It is widely acknowledged that inflation inhibits growth (see: Waliullah&Fazli-Rabbi
2011; Babatunde&Shuaibu 2011). Conversely, Tobin (1965) posits that inflation spurs growth
via capital accumulation and interestingly, Mishra, Mishra & Mishra (2010) provide empirical
support for Tobin‟s supposition in India. This raises the question of whether inflation promotes
or retards output growth.
In Nigeria, output growth and inflation have exhibited significant fluctuations over the
years and have witnessed substantial changes since the country‟s attainment of political
independence in 1960. Boosting the level of output is of utmost importance given its impact on
the standard of living. The Nigerian economy is characterized by structural challenges that limit
its ability to sustain growth as the economy is highly dependent on a single commodity for
economic activities, fiscal revenues and foreign exchange – oil. For example, the high growth
recorded during 2011-2015, which averaged 4.8% per annum is mainly driven by higher oil
prices (Ministry of Budget & National Planning, 2017). Interestingly, this oil money is also
capable of increasing the price level.
Inflation has been an issue ofconcern to policymakers in Nigeria in recent years, given
the need to stimulate domestic demandand to meet government‟s huge fiscal obligations in a
You either get what you want or your money back. T&C Apply
You can find more project topics easily, just search
SIMILAR ECONOMICS FINAL YEAR PROJECT RESEARCH TOPICS
» CHAPTER ONE INTRODUCTION 1.1 Background of the study The word “Scarcity” means when there is insufficiency of something. Since there is insufficie...Continue Reading »
2. MONETARY POLICY AND INFLATION IN NIGERIA ECONOMY (A CASE STUDY CENTRAL BANK OF NIGERIA (CBN) KADUNA)» CHAPTER ONE 1.0 INTRODUCTION Monetary policy entails the government policies aimed at changing the quantity of money or credit condition. In every eco...Continue Reading »
» ABSTRACT This study examined the impact of budgetary control on profitability of an organization. Thus, the importance of budgetary cannot be emphasiz...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 Background of the Study Economic growth is a fundamental macroeconomic policy objective which countries all over the worl...Continue Reading »
» CHAPTER ONE INTROUDCTION 1.1.BACKGROUND OF THE STUDY All over the world, policy makers have always been on the move to ensure that there is sustainabl...Continue Reading »
» ABSTRACT This study attempt to examine the graduate unemployment in Nigeria: A case study of Sokoto Metropolis, Sokoto State. It seeks to identify the...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 Background to the Study Stock exchange Market is a financial market involving institutions that deal with securities with...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND TO THE STUDY There is a growing consensus among researchers and health policy makers that out of pocket expend...Continue Reading »
» CHAPTER ONE 1.1 BACKGROUND TO THE STUDY As confirmed by Ugochukwu (1999:02), agriculture is the first and most thriven occupation of mankind. From its...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Prior to the enactment of the Pension Reform Act (2004), Pension Schemes in Nigeria had been bede...Continue Reading »