IMPACT OF MONETARY POLICY ON UNEMPLOYMENT IN NIGERIA (2014 – 2023)

This study investigated the effects of monetary policy on unemployment in Nigeria from 2007 to 2023. The study's objectives were to analyse trends in monetary policy and unemployment, examine the short-run and long-run relationships between monetary policy and unemployment, and establish the causal relationship between monetary policy and unemployment. The study employed a descriptive quantitative research design, utilizing annual secondary time series data from 2007 to 2023 and applying descriptive statistics, OLS regression analysis, and Granger causality tests. The critical variables analysed included the unemployment rate, monetary policy rate, cash reserve ratio, liquidity ratio, and treasury bills rate. The results revealed that while the monetary policy rate exhibited a significant upward trend in recent years, unemployment demonstrated fluctuating patterns, with periods of increase and decline. The OLS regression analysis indicated that monetary policy had a significant impact on unemployment in both the short and long run. Additionally, the Granger causality test identified a unidirectional causality from monetary policy to unemployment, highlighting the influence of monetary policy adjustments on employment levels. Future studies should consider the inclusion of other labour market variables, such as wage growth and labour force participation rates, and apply alternative econometric techniques to further explore the complex dynamics between monetary policy and unemployment.