Differs by measuring the impact of the monetary

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differs by measuring the impact of the monetary policy variables (money supply and inflation) in a single frame work. Apart from this, most of the earlier empirical studies focused on the short run impacts, underestimating the fact that long run behaviour of variables might deviate totally from the short run behaviour of variables. Therefore making achievement of proper mixed of monetary aggregate with level of interest necessary for a targeted level of inflation that is growth driving elusive (Osuala et al, 2013 ; Taiwo, 2011 and Ogunmuyiwa et al, 2010). The present study accounts for this shortcoming, by investigating both the short run and long run relationship between monetary policy indicators and economic growth. In addition, apart from the fact that most of the related empirical works uses data spanning over a short period, works conducted in Nigeria on these macroeconomic variables do not considered causal connections among the variables of interest, thus making inferences drawn in such circumstances having a long term negative impact on policy implementation and outcomes (Adesoye, 2012; Osuala, 2013). In the light of this, the paper is collapsed into five sections including this introduction as section one. Section 2 reviews the related literatures and conceptual framework, while section 3 examines methodology. Section 4 deals with discussion of results while section 5 concludes with recommendations. II. Literature Review And Conceptual Framework In order to place our argument and discussions in proper theoretical and empirical perspective, we conceptualized the economic variables that are involved in this work and review the relevant literature. 2.1 Conceptual Framework To start with, money supply is the total amount of all forms of money in circulation in a given country at a given period of time (Johnson, 1987; Jhingan, 2005; Abdullahi, 2009). Total money supply can be grouped into two
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Impact of Money Supply and Inflation on Economic Growth in Nigeria (1973-2013) DOI: 10.9790/5933-0803042637 27 | Page broad categories as defined by Central Bank of Nigeria: These are near money ( M1 ) and broad money ( M2 ) (CBN, 2003). M1 indicates currency in circulation plus current account deposits with commercial banks while M2 is M1 plus savings and time deposits. Interest rate on the other hand, is regarded as Bank rate or monetary policy rate ( MPR ) and it is one of the intermediate monetary policy instruments at the control of Central Bank to control money supply and thus inflation rate (Anyaele, 2003). If the apex Bank feels to curtail money supply by reducing the power of participants (commercial banks), it will increase interest rates, while in case of an expansionary monetary policy, the reverse will be the case. Inflation generally entails a sustained rise in the price of goods and services in an economy (Medee and Nembee, 2010; Andy, 2001). Precisely, it is a situation in which the value of money is declining i.e when prices are raising rapidly (Aderinto and Abdullahi, 1988). Todaro (1985) defined economic
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