Abstract

There is no consensus among economists on the relationship between monetary policy and unemployment. The objective of this study is to determine the nature and extent to which monetary policy is related to unemployment in Nigeria from 1991 to 2022 using autoregressive distributed lag (ARDL) bounds test approach. The data of the growth rate of gross fixed capital formation and monetary policy rate are obtained from Central Bank of Nigeria Statistical Bulletin. The data of all the other variables are obtained from World Development Indicators. The monetarist view on the influence of monetary policy on unemployment is found in this study. The growth rates of money supply, banks’ credit and gross fixed capital formation had a significant negative relationship with unemployment and population growth rate had a significant positive relationship with unemployment in Nigeria in the short run. The monetary policy rate and exchange rate had no relationship with unemployment in Nigeria in both the short run and long run. The decrease in the growth rates of money supply, banks’ credit and gross fixed capital formation and an increase in population growth rate had led to an increase in unemployment in Nigeria.