Fore a declining level of demand will result into

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fore a declining level of demand will result into pilling up of inventory and consequently fall in production outputs resulting into declining growth rate. This result corroborates the earlier empirical results by Omoke (2010), Amino and Amono (2012) and Osuala (2013), and contradicting findings of Taiwo(b) (2011) and Abiola et al .. On the side of interest rate, fall in economic growth could be attributed to unfriendly and unattractive rental cost of capital charged by loan providers. This finding is in alignment with the works of Taiwo(b) 2011; Irfan and Ume (2011), and Hameed Gul et al . (2012). Further in the results, the statistically significant and negatively signed ECM term , further lend credence to the existence of co-integration among the variables under investigation. The ECM coefficient is about -0.781293 and suggests that about 78% of last year disequilibrium is corrected in the current year. Hence, when growth rate is above or below its equilibrium level, the speed of adjustment is approximately 78% within the first year to ensure full convergence to its equilibrium level. The adjustment speed is thus very high. 4.2.3 Causality Test Results Going by the results of Granger causality test as shown in table (7), there is no causality running from any of the explanatory variables to the dependent variable i.e broad money supply ( BMGDP ), inflation rate ( INFD ), and real interest rate ( RINTR ). This implies that for the years under review, real interest rate has not been attractive to have caused money supply for investment purposes in the real sector to the point of granger causing economic growth. This result is similar to the findings of Ogunmuyiwa and Francis (2010) and Ahmad and Suleiman (2011). Table 7: Results of the VEC Granger Causality/ Block Exogeneity Wald Test Long-run causality Short-run causality Dependent variables Eqn ∆GDPGR 9.1049 - 4.5730 4.3748 5.4252 (8) P.V (0.6939) (0.3340) (0.3577) (0.2464) ∆BMGDP 22.950* 10.6160* - 8.1485* 5.7169 (9) P.V (0.0282) (0.0312) (0.0863) (0.2213) ∆INFD 14.2570 5.3684 11.0787* - 1.4067 (10) P.V (0.2846) (0.2515) (0.0257) (0.8430) ∆RINTR 14.5651 6.8201 8.802* 0.3795 - (11) P.V (0.2661) (0.1457) (0.0662) (0.9841) - *, **, *** denotes statistical significance at 10%, 5% and 1% levels respectively. Figures in parenthesis indicate the degree of freedom. Source: Authours’ Computation using E -view 7.1.
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Impact of Money Supply and Inflation on Economic Growth in Nigeria (1973-2013) DOI: 10.9790/5933-0803042637 34 | Page However, unidirectional causality is observed running from economic growth to broad money supply indicating that economic growth granger causes broad money supply. These findings could be hanged on the quantity theory of money where money velocity is a positive function of total money supply. As money revolves and circulates round the economy due to increasing rate of investment, resulting into increase consequently increase money stock. It could also imply that investment opportunities and potentials that are been exploited day-by-day stands as a ground for increasing money stock. View from another perspective, over the years the share of oil revenue formed the larger percentage of the country total national income, the buck of which is been used only to service recurrent expenditures like salaries, subsidies and estacodes. Therefore, it is not out of place to obtain a result in which growth in income causes money supply. This finding is similar to the
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