ABSTRACT
This
research work was embarked to aid you to study the effectiveness of monetary
policy in controlling inflation in Nigeria. The need to the study was
informed by the tend inflationary growth over the years and also the impact of
the inflation in achievement of the four basic economic growth, price,
stability, high level of employment and low inflationary rate for favourable
balance of payment. Many research works have been carried out on this issue
previously but despite all the good policies of government and its agent, these
goals have remained elusive over the years. There was therefore a need for a
study on these sensitive issues. For the purpose of this study, data was
gathered through the secondary source, which includes money supply, gross
domestic product and the inflationary rate for a period.
TABLE OF CONTENT
Title page II
Approval page III
Dedication IV
Acknowledgement V
Abstract VI
Table of content VII
CHAPTER ONE
Introduction 1
1.1
Statement of problem 2
1.2
Research question 4
1.3
Definition of the term 4
1.4
Objectives of the research 6
1.5
Scope of the study 7
1.6
Limitations of study 8
CHAPTER TWO
An overview of Nigerian monetary
policy 11
2.1 Administration of monetary
policy 13
2.2 Objectives of monetary policy 14
2.3 Instruments of monetary policy 15
2.5 Inflation in Nigeria 18
2.6 Types of inflation 20
2.7 Causes of inflation 21
2.8 Monetary policy as control
measure in Nigeria 25
CHAPTER THREE
Research design and methodology 29
3.1 Sources of secondary data 29
3.2 Method of investigation 30
3.3 Sampling procedure 30
CHAPTER FOUR
4.1 Conclusion/recommendation 31
4.2 Recommendation 31
Bibliography 33
CHAPTER ONE
INTRODUCTION
In
Nigeria, the central bank which is at the apex of the banking pyramids applies
a variety of policy measure and technique with which to control and regulate
money and credit in order to attain the desired for necessary to use the
package of discussing the efficiency or otherwise of general economic
management strategies.
Government
policy statement clearly revealed that inflation becomes a problem in Nigeria
about early 1970s. The contention can be sustained further by the fact that the
economic brogan to experience double digit rate of inflation from the early
part of the decade globally, the power of the inflation is not peculiar to Nigeria.
But it is general to attain to a higher level of economic development as the
period generally lead to inflation spiral in the country.
But
whether inflation in Nigeria
is due to monetary mismanagement on the part often authorities concerned or
caused by inherent structure deficiencies still remain uncertain. Many factors
have been identified to be responsible for inflationary pressure in the
economy. In a symposium in Nigeria
held sometimes ago, most of the participants stressed on money supply net come
of government expenditure. Limitation in real output and the influence
comported, as the major causes of inflation in Nigeria. In the process of
formulating monetary policy it is of paramount.
1.1 STATEMENT
OF THE PROBLEM
Many attempts have been made by the
Nigerian authorities to attain higher rates generally being accompanied by
certain degrees of prices increase in recent into years. The phenomenon
developed into several and prolonged inflation and stagflation indeed, it is
increasingly being recognized that a process of rapid economic growth is likely
to provoke inflationary pressure.
However,
whether the problem of inflation in this country is due to mismanagement of
monetary policy tools or structural deficiencies still remain a contriver sail
mother.
During the last decade, the problem of
inflation on reflection to economic growth and development has been extensively
discussed. The problem is not peculiar to Nigeria. But was ashamed global
phenomenon on. It is generally agreed world wide that inflation is socially
unjust. Inflation also effects general economic behaviour and the pattern of
resources allocation. By disporting price relations and under mining general
confidence, prolonged inflation tends to direct investment away from production
sector and this slacker growth.
Furthermore,
inflation discourages private savings and encourage speculation among the
various economic units.
Another
consequence is that it result in balance of payment difficulties and reduce the
external having its national economic management strategies largely informed by
new classical and Keynesian persuasion, have song over the decades for the
analysis recommendation upon the very degree with respect to taxing public. The
monetary control policy has non-, thus primary variable.
I
hereby try to analyze the causes and effect of Nigeria inflation in terms of some
qualifiedly variable as: money supply, real output etc.
1.2 RESEARCH
QUESTION
The following are the question
point to my research.
1.
What are the causes of inflation?
2.
What are the consequences of inflation?
3.
Does inflation have any effect in the standard of
living?
4.
Does inflation have any effect on the income?
5.
Does level of supply influence date?
6.
Does inflation hamper economic growth?
7.
Can monetary policy measure control inflation?
8.
Can economic growth be consistent during inflationary
period?
9.
How can inflation be controlled if not eliminated?
1.3 DEFINITION
OF TERMS
The operational terms are defined
to help the reader to have a better knowledge of research .MONETARY
POLICY
This
is any conscious action undertaken by the monetary authorities to change the
volume, availability, quantity, cost and direction of money and credit in a
given economy.
It
can also be defined as the credit measures adopted by central banks to control
the supply of money of which is the objective of achieving the general economic
policy.
It
consists of action by the government, which are aimed at the achievement of
certain set of economic objectives.
POLICY
This
is statement include objective to attain it, many include proportion in the use
of means to attain those objectives.
FISCAL POLICY
This is just a government policy
that concerns revenue and taxation.
INFLATION
This
is rise in the general price level of all goods and services.
DEMAND-PULL INFLATION
Condition
of general rising in prices caused by increase in aggregate demand expenditure,
savings campaign, credit, controls image adjustment and all the conceivable
anti-inflationary measure affecting the price which all combined should
determine in general level.
All
the measure so far adopted here provided inadequate in solving the problem of
inflation in the country. The suffering of masses are unending as the daily
price shags occurs.
Indeed,
a more far reaching solution to the problem is mulled. Hence, this study seems
to find what control has monetary policy on inflation.
1.3 OBJECTIVES
OF THE RESEARCH
It is necessary having the primary
objectives of this research having identified the ruling monetary policy
instrument in Nigeria
and economic objectives that they expected to influence.
They are as follows:
1.This work is getting out to
instigate the major causes of inflation in Nigeria during 1990s.
2. To investigate if not in the
achievement of this efficient objective of the economy and inflation control in
particular.
3. To see if the non-validation of
the economic objectives is due to chosen instrument or in appropriate
application of the instrument.
4. To recommend policy sudation
based on the above findings.
The
policy recommendation based on the above findings will be used as a quite in
the further application of monetary policy or policies.
1.5 SCOPE
OF STUDY
Since inflation arises when
aggregate demand exceed aggregate supply, we shall focus our attention of
examination of
BALANCE OF PAYMENT
This
is a double entry statement of account, which reveals the direct ness of
various transactions in goods. Devices and capital flows between resident of
one country and those of the rest of the world.
EFFICIENCY
This
is the ability of Nigeria
monetary policy to achieve the desired macro economic objectives in general and
to control inflation in particular.
1.6 LIMITATIONS
OF STUDY
The
limitations of the study centers around the time limit, which this study has to
be completed, is little more than three (3) months, these limitations not
withdrawing is the researcher has.
COST-PUSH INFLATION: Conditions
of general rise in price causes of production costs.
HYPER INFLATION: Situation
where prices are rising with little or no increase in output.
ECONOMIC GROWTHS: An
increase in the productivity of a nation or area.
INTEREST RATE: The cost
of credit.
MONEY
SUPPLY: Used as
(MI) is used for the purpose of this research and as defined as the currency
with non bank public © plus private sector demand deposits the other definition
of money supply (M2) as that which incorporate both precautionary demand and
store of value in M1. This technically defined as follows:
M2
= 1 = + during deposit (SO) +
Time
deposit (TO)
GENERAL PRICE LEVEL: The
overall prices of goods and services usually measured with consumer price
needs. (CPI) the CPI measures the rise or fall in the general level.
CENTRAL BANK OF NIGERIA (CBN)
This
is the highest monetary policy in Nigeria charged with responsibilities of the
issuance of legal tender currency in Nigeria maintenance of external reserve in
order to safeguard the international relieve of the currency. The promotion of
the monetary stability and sound financial structure, banker and financial
advice to the federal government and banker to other bankers in Nigeria
made every effort to ensure the realization of the research objectives.
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