Money supply mechanisms in Nigeria

Abstract

This study investigates the process of money supply mechanism in Nigeria in order to provide an explanation for the inflationary acceleration in money supply that occurred in the period 1970 to 1989. The initial double-digit inflation was found to have originated from the rapid growth in the external sector as a result of the oil export boom of the 1970s. The monetary authorities largely monetized the export receipts in order to finance a greater level of economic activities. The government then followed the monetization policy with a real bills doctrine, the success of which was ensured by the generous lending stance of central bank. African Journal of Economic Policy Vol. 11(2) 2004: 49-72