THE IMPACT OF MONEY SUPPLY ON REAL GROSS DOMESTIC PRODUCT (RGDP) OF NIGERIA, 2000-2021

Abstract

Abstract The study examined the impact of money supply on real economic growth of Nigeria. The general objective is to find out the impact of money supply on real Gross Domestic Product (GDP). In the model specified, real gross domestic product is the regressed while real money supply, real exchange rate and real interest rate are the regressors. Secondary data used were collected from the CBN statistical bulletin for the period of 2000-2021. The statistical technique used for the analysis is ordinary least square (OLS) technique. From the analysis, real money supply and real interest rate are not significantly related to real GDP while exchange rate is statistically significant. The model has 61% explanatory power and the Durbin-Watson statistic does not reveal any autocorrelation among the variables used. One percent increase in real money supply will reduce real GDP by 0.16%, one percent increase in real exchange rate will also reduce real GDPby0.03% and 1% increase in real interest rate will increase real GDP by 0.05% approximately. The study recommend that government should utilize the contractionary monetary policy to reduce the excess money in circulation for a robust economy.