Opue and Bankong
Greener Journal of Social Sciences Vol. 4 (2), pp. 062-070, February 2014
ISSN: 2276-7800 © 2011 Greener Journals
Manuscript Number: 052713639
Monetary Policy Adjustments under Alternative Inflationary Conditions: The Nigerian Case
Opue Job Agba1*, Bankong B.2
1Department of Economics, University of Calabar, Calabar
2Department of Economics, University of Nigeria, Nsukka.
*Corresponding Author’s Email: ngaji74 @ yahoo. com, Phone: +2347062522700
This work provides an answer to the question: what should be the appropriate monetary policy under different inflationary conditions (that is, demand-pull and cost-push inflations) and what should be the effect of this non-distinction in the direction of monetary policy? Since no modern economy is autarky, the Nigerian economy is considered and examined analytically. Therefore, a conclusion that the problem of macroeconomic instability faced-with in countries like Nigeria, is as a result of the applications of inappropriate adjustments in monetary policy under different inflationary conditions is drawn. Thus, a recommendation that expansionary monetary policy be adopted for such countries is prescribed, but to an extent where a unit increase in cost must correspond with a unit increase in broad money supply. Likewise, such economies like Nigeria are encouraged to increase their exports and reduce imports in order to redress the problems of cost-push (imported) inflation.
Keywords: Monetary-Policy, Demand-pull, Cost-push, Inflation