Empirical Analysis of Monetary Policy & Unemployment in Nigeria: An Econometric Approach

The study empirically investigated the relationship between monetary policy and unemployment in Nigeria. After critical review of theoretical and empirical literature, a model was constructed with unemployment as the dependent variable while interest rate and money supply were the independent or explanatory variables. Data used for the study were sourced from the Central Bank of Nigeria. The Augmented Dickey Fuller, Johansen co-integration, and fuller modified ordinary least square methods were used to analyze the data. Findings from the study show that interest rates have a negative and statistically insignificant relationship with interest rates. On the other hand, the money supply has a positive and statistically significant relationship with unemployment. Based on the findings, monetary policy tool is a veritable instrument to achieve the macroeconomic objective of addressing the challenge of unemployment in the country.