The impact of central bank of Nigeria's intervention programmes on effectiveness of monetary policies

Abstract

The study was conducted to find out the impact of the CBN intervention programmes on the effectiveness of monetary policies in Nigeria. It analysed the impact of the CBN intervention programmes on inflation and output using an ARDL model and evaluated the impact of the programmes on the responsiveness of inflation and output to changes in the monetary policy rate, using a segmented model. The results show that the intervention programmes have no-significant impact on inflation in Nigeria both in short and in the long-run. However, in the long run, a unit increase in the amount spent on the programmes increases the GDP by 0.047 unit, which was found to be statistically significant at 7 per cent level. On the impact of the intervention programmes on the effectiveness of the monetary policy, the segmented model results show that the introduction and implementation of the CBN intervention programmes had no significant impact on the responsiveness of inflation and output to changes in the monetary policy rate in Nigeria. However, the coefficient of the additive dummy confirms a significant difference between the output during the period of massive intervention and period of no intervention. Specifically, output during the period of massive intervention, other things being equal, was ₦91.45 billion higher than that of periods of no intervention.