Monetary Policy and Unemployment in Nigeria: Is there a Dynamic Relationship?

Authors

Sunday N. Essien, Central Bank of Nigeria, Abuja
Garba A. Manya, Central Bank of Nigeria, Abuja
Mary O.A. Arigo, Central Bank of Nigeria, Abuja
Kufre J. Bassey, Central Bank of Nigeria, AbujaFollow
Suleiman F. Ogunyinka, Central Bank of Nigeria, AbujaFollow
Deborah G. Ojegwo, Central Bank of Nigeria, AbujaFollow
Francisca Ogbuehi, Central Bank of Nigeria, AbujaFollow

Keywords

Investment, Monetary Policy Rate, Money supply, Unemployment

Abstract

This paper examines the link between unemployment and monetary policy in Nigeria using a vector autoregressive (VAR) framework for the period 1983q1 – 2014q1. The paper investigates the effect of structural change by identifying three structural breakpoints and incorporating them into the VAR model as dummy variables. The results show that a positive shock to policy rate raises unemployment over a 10 quarter period. In addition, all the variables used as proxy in the model jointly Granger cause unemployment, implying the existence of a dynamic relationship between monetary policy and unemployment in Nigeria.

Author Bio

The authors are staff of Statistics Department, Central Bank of Nigeria.

Publication Title

CBN Journal of Applied Statistics

Issue

1(b)

Volume

7

Recommended Citation

Essien, Sunday N.; Manya, Garba A.; Arigo, Mary O.A.; Bassey, Kufre J.; Ogunyinka, Suleiman F.; Ojegwo, Deborah G.; and Ogbuehi, Francisca (2016) "Monetary Policy and Unemployment in Nigeria: Is there a Dynamic Relationship?," CBN Journal of Applied Statistics (JAS): Vol. 7: No. 1, Article 10.
Available at: https://dc.cbn.gov.ng/jas/vol7/iss1/10