Impact Of Monetary Policy On Household Consumption In Nigeria:- Ngerem Joseph I

ABSTRACT

 Monetary policy refers to a combination ofmeasures designed to regulate the value, supply and cost ofmoney in an economy; in consonance with the expected level of economic activity. The study was design to investigate the impact of monetary policy on household consumption expenditure in Nigeria covering the period of1981 to 2018. The objectives ofthe study were to examine the impact ofmonetary policy on household consumption expenditure in Nigeria and to evaluate the long run relationship between monetary policy and house hold consumption expenditure in Nigeria. Ordinary Least Square (OLS) regression technique was employed in research, thus revealed that broad money supply has a positive and significant impact on private consumption expenditure in Nigeria whereas, interest rate and exchange rate has a negative relationship with private consumption expenditure in Nigeria and there exist a long run relationship between monetary policy and private consumption expenditure in Nigeria. The former was insignificant while the later was significant. Thus on the overall performance ofthe model, the study concluded that monetary policy contributed significantly on household consumption expenditure in Nigeria for the period ofstudy. Based on the finding, the following recommendation were made; despite the significant impact of money supply, the government should still adopt monetary policy that will encourage increase in money supply in the economy in order to increase purchasing power of citizen in the country .There is an urgent need for government to reduce interest rate. Thus, in a Long run increase will increase household consumption expenditure in Nigeria. There is also need to reduce exchange in order to attract more foreign and local investment in the country which will increase the circulation ofmoney and also individual asses to money