Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria

Nathaniel E. Urama; Moses O. Oduh; Emmanuel O. Nwosu; Augustine C. Odo

EN

Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria

Abstract

In an attempt to find out the degree of monetary non-neutrality in Nigeria we started from finding out the size of price rigidity in the country. Computation with Ball and Romer method showed that price rigidity is optimal decision for firms in Nigeria only when the menu cost is well above 2.28% of the firm’s revenue which is on the high side, showing the likelihood of weak price rigidity in the country. Confirming this, the IRFs of the SVAR shows that the response of inflation to nominal shock has only one period lag. These combined results led to a small though persistent response of output to the nominal shock. The result of the study therefore points towards large nominal and small real effect of monetary policy in Nigeria and conclude that monetary policy will be a better option for contractionary plan but not for an expansionary plan.

Keywords

Price rigidity, menu cost, monetary non-neutrality, monetary policy

Details

Primary Language

English

Subjects

-

Journal Section

-

Authors

Nathaniel E. Urama This is me

Moses O. Oduh This is me

Emmanuel O. Nwosu This is me

Augustine C. Odo This is me

Publication Date

June 1, 2013

Submission Date

June 1, 2013

Acceptance Date

-

Published in Issue

Year 2013 Volume: 3 Number: 2

IZ

https://izlik.org/JA74RN72KA

Cite

RIS / Bibtex

APA

Urama, N. E., Oduh, M. O., Nwosu, E. O., & Odo, A. C. (2013). Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria. International Journal of Economics and Financial Issues, 3(2), 525-536. https://izlik.org/JA74RN72KA

AMA

1.Urama NE, Oduh MO, Nwosu EO, Odo AC. Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria. IJEFI. 2013;3(2):525-536. https://izlik.org/JA74RN72KA

Chicago

Urama, Nathaniel E., Moses O. Oduh, Emmanuel O. Nwosu, and Augustine C. Odo. 2013. “Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria”. International Journal of Economics and Financial Issues 3 (2): 525-36. https://izlik.org/JA74RN72KA.

EndNote

Urama NE, Oduh MO, Nwosu EO, Odo AC (June 1, 2013) Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria. International Journal of Economics and Financial Issues 3 2 525–536.

IEEE

[1]N. E. Urama, M. O. Oduh, E. O. Nwosu, and A. C. Odo, “Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria”, IJEFI, vol. 3, no. 2, pp. 525–536, June 2013, [Online]. Available: https://izlik.org/JA74RN72KA

ISNAD

Urama, Nathaniel E. - Oduh, Moses O. - Nwosu, Emmanuel O. - Odo, Augustine C. “Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria”. International Journal of Economics and Financial Issues 3/2 (June 1, 2013): 525-536. https://izlik.org/JA74RN72KA.

JAMA

1.Urama NE, Oduh MO, Nwosu EO, Odo AC. Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria. IJEFI. 2013;3:525–536.

MLA

Urama, Nathaniel E., et al. “Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria”. International Journal of Economics and Financial Issues, vol. 3, no. 2, June 2013, pp. 525-36, https://izlik.org/JA74RN72KA.

Vancouver

1.Nathaniel E. Urama, Moses O. Oduh, Emmanuel O. Nwosu, Augustine C. Odo. Price Rigidity and Monetary Non-Neutrality in Developing Countries: Evidence from Nigeria. IJEFI [Internet]. 2013 Jun. 1;3(2):525-36. Available from: https://izlik.org/JA74RN72KA