ON THE TRANSMISSION OF MONETARY POLICY TO THE INDUSTRIAL SECTOR IN NIGERIA
DOI:
https://doi.org/10.53555/nnssh.v8i3.1181Keywords:
industrial sector, monetary policy, transmission, sectoral performance, ADL, growthAbstract
The Nigerian economy is heavily dependent on the working of the industrial sector. This is because of the role of the industrial sector as a valuable contributor to economic growth. Hence the effect of monetary policy impact on the industrial sector is an integral economic analysis to promote sectoral performance. We use time series data from1980 to 2020 from the Nigerian industrial sector to investigate such impact in an autoregressive distributed lag process. Our evidence shows that (1) that the effect of monetary policy transmission to the industrial sector was not strong at least in the short run, except for money supply channel that showed a statistically significant strength of at least one percent growth impact on industrial sector output. Monetary policy rate will produce an infinitesimal positive effect on industrial sector performance that will decline over time lag with significant influence in reducing industrial sector performance. (2) Over time, monetary policy pass-through to industrial sector will be strong, positive and statistically significant, implying that monetary policy transmission to the industrial sector in Nigeria is a time-lagged-thing. One of our policy recommendations is a caution on the tendency towards policy reversal which may dampen policy effect on the industrial sector.
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