Asymmetric Impact of Monetary Policy Shocks on Output and Price Levels in Nigeria
Keywords:monetary shocks, asymmetric, symmetric, NARDL, output, price level
In economic discourse, there are arguments on the effects of monetary policy shocks on output and price level. To some the effect is asymmetric while to others it is symmetric. Thus, this study added to the existing debate by investigating the asymmetric impact of monetary policy shocks on output and price level in Nigeria using annual data spanning from 1981 to 2018. The study employed the non-linear autoregressive distributed lag (NARDL) model and the Wald test. The hypotheses tested in this study were done at 5 and 10 percent levels of significance. The results obtained suggested strong evidence of monetary policy asymmetry in Nigeria with negative (expansionary) shock having more impact than positive (contractionary) shock in the long run. Based on these findings, the study recommended that a proper monetary policy mix is required to simultaneously achieve economic growth and price stability.
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