Abstract
This study examined empirically the relationships between money, price and output in Nigeria. Time series data for monetary policy variables (BM, MPR, M1 and M2), Inflation (GDP deflator and CPI inflations) and real GDP was collected from Central Bank of Nigeria’s statistical bulletin from 1981:Q1 to 2013:Q4. The study was carried out in three folds: firstly, the estimation of the short run relationship between money, price and output using correlation coefficient. The evidence shows a positive and significant correlation between money and output but negative and insignificant relation between money and price. Secondly, the study examined the nature of the short run causation between output and money using Granger causality test. The result reveals that money cause output and not the other way. Finally, the impact of monetary policy shock on price and output was estimated using structural vector autoregressive model (SVAR), the empirical evidence reveals the existence of puzzling relationship between monetary policy shock and output in Nigeria.
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