EXAMINING THE RELATIONSHIP BETWEEN MONETARY POLICY AND STANDARD OF LIVING IN NIGERIA: A REGRESSION ANALYSIS APPROACH.

Abstract

This study investigated the impact of monetary policy on the standard of living in Nigeria, using a multiple linear regression model with robust standard errors. The study employs annual report data from 2012 to 2021, sourced from the Central Bank of Nigeria. The result of the finding show that monetary policy has a significant negative impact on the standard of living, with 1% increase in monetary policy rate leading to a 0.25% decrease in the standard of living. It also finds that inflation rate, unemployment rate, GDP growth rate, exchange rate and government spending have significant impacts on the standard of living. The study controls for potential endogeneity using lagged values of the independent variables and includes interaction terms to examine nonlinear relationship. The findings of this study have important implications for monetary policy formulation and suggest that policymakers should consider the potential impact of monetary policy decisions on the standard of living in Nigeria.

Keywords

Monetary Policy, Standard of living, Multiple Linear Regression, Robust Standard Errors, Nigeria.