Unconventional Monetary Policy Tools and Macroeconomic Stability during Economic Shocks in Nigeria

Abstract

This study aims to evaluate the unconventional monetary policy tools and macroeconomic stability during economic shocks in Nigeria. The study was guided by three research questions. The research design employed was ex post facto research design.  Secondary data was used which was collected from International Monetary Fund (IMF), National Bureau of Statistics (NBS), Economic Data GDP and World bank websites.  Multiple regression analysis was employed by the study using E-view software. The result indicates that the quantitative easing has a positive coefficient of 0.856 which means that as the unconventional monetary policy interventions are on the rise, the economic growth rate is likely to go up. The result also shows that the positive coefficient of quantitative easing is 3.941 that implies, as QE increases, there is a tremendous increase in the rate of inflation. Also, the finding reveals that the coefficient of quantitative easing is negative at -0.654 implying that the higher the level of unconventional interventions by the monetary policy, the lower the level of unemployment. In conclusion the results indicated that quantitative easing has a positive impact on the economic growth and important in decreasing unemployment but also plays a role in increasing inflation. As such, liquidity injections should be administered carefully by the policymakers to strike a balance between economic stimulation and price stability and sustainable macroeconomic performance. The study therefore recommends that the Central Bank of Nigeria needs to be keen to manage how it adopts the quantitative easing to avoid the situation of injecting liquidity in the economy and causing too much inflationary pressure in the economy.