Monetary Policies and Efficacy of Monetary Supply in Nigeria

Abstract

In this study, we establish the relationship between monetary policies control and the efficacy of money supply in Nigeria. We examine the adjustment process in money supply and multiplier from disturbance to equilibrium. The methodology used in estimating the model of this study is the three stage least square. We solve for the long run elasticity co- efficiency and the speed of adjustment from disturbance to equilibrium. It was therefore concluded given the limit set by the specified equation in this study, that there exist high significant relationship between money supply and high-powered money and that the short-run and long run impact of high powered money and money supply are positive. It follows therefore that if monetary authorities want to control money supply, it is necessary to forecast the value of the money multiplier. Once the money multiplier is predicted the amount of high-powered money required to achieve a desire level of money supply can be determined.