The role of money supply and trade on economic growth under different interest and exchange rates regimes: Empirical evidence from Nigeria

Abstract

The literature has documented several works on the achievement and
sustenance of economic growth. However, none has investigated the role
of money and trade on economic growth with respect to regimes of
interest and exchange rates. This was investigated in this paper using
time series data to establish the one-to-one relationship between money
supply, trade, and economic growth in Nigeria at different regimes of
interest and exchange rates using threshold regression model. The results
show (i) a mixed significant one-to-one relationship between money
supply and economic growth at different regimes of interest, (ii) a
consistent positive insignificant one-to-one relationship between trade
and economic growth at various exchange rate regimes, (iii) a non-linear
significant relationship between money supply and economic growth, (iv)
a linear insignificant relationship between trade and economic growth in
Nigeria. The results authenticate the significance of money in achieving
growth and provide new insight that exchange rate matters for trade to
accelerate growth. The originality and significance of the study lies in the
establishment of one-to-one impact and the nature of linear association
among money, trade, and economic growth with practical implications.