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Effect of Real Economy Predictors on Monetary Policy Responses: Testing Model Fits For OLS, IV and IV-GMM Estimators

Author

Listed:
  • Olatunji Abdul Shobande
Abstract
The paper investigates the effect of real economy predictors on domestic monetary policy reaction function in Nigeria over the period of 1983 and 2018, using a quarterly data obtained from the central bank of Nigeria Statistical Bulletin. The evidence is based on the Ordinary Least Square (OLS), Two stages Least Squares (2SLS) and Generalized Method of Moment (GMM) estimators. The findings suggest that inflationary focus is necessary condition, but not sufficient as the welfare implication must also be built into policy reactions. Thus, it recommends that policy discretion towards improving the wellbeing; reduce productivity shocks and ensuring greater policy coordination is urgently required.

Suggested Citation

  • Olatunji Abdul Shobande, 2019. "Effect of Real Economy Predictors on Monetary Policy Responses: Testing Model Fits For OLS, IV and IV-GMM Estimators," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 5(3), pages 90-96, September.
    • Handle: RePEc:khe:scajes:v:5:y:2019:i:3:p:90-96
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    References listed on IDEAS

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    Cited by:

    1. Patricks Ogiji & Tersoo Shimonkabir Shitile & Nuruddeen Usman, 2022. "Estimating asymmetries in monetary policy reaction function: an oil price augmented Taylor type rule for Nigeria under unconventional regime," Economic Change and Restructuring, Springer, vol. 55(3), pages 1655-1672, August.

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    More about this item

    Keywords

    Monetary policy; Inflation; Productivity; GMM/IV; Nigeria;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F19 - International Economics - - Trade - - - Other
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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