UNEMPLOYMENT AND MONETARY POLICY IN NIGERIA AND ECONOMIC ANALYSIS 1980 – 1995)

INTRODUCTION As an instrument of government economic management monetary policy has to purse, the broad objectives of national economic policy.  In Nigeria as with most countries the familiar long-term goals of economic policy are full employment, price level stability, economic development and equilibrium in the balance of payment unfortunately, most of these objectives fall short of being a useful instrument or evaluating the actions of any monetary authority (Teriba, 1977). An economy is strongly influenced by many domestic and international forces are outside the control of the monetary authority, which ultimately affects these policy objectives.  To pas a judgment in the economy performance based on the policy instruments (whether monetary or fiscal) is ever constrained by imperfect knowledge and inadequate statistical data peculiar to most developing nations.  To obviate this problem, Hodgam (1973) has argued that monetary authorities must be judged by the contribution they make towards achieving these goals as measure by those criteria. It is with this as background that I focused on the efforts of the federal government via monetary policy in alleviating the perennial problem of unemployment.  All these points; it would be pertinent to define the two terms – unemployment and on monetary policy.
Monetary policy is defined by the Central Bank of Nigeria (C.B.N 1992) is the combination of measures designed to regulate the value supply of cost of money in an economy, in consonance with the level of economic activity. Generally, it is the combination of market taken by the monetary authorities (that is Central Bank of Nigeria and ministry of financial) to influence directly or indirectly, the supply of money and credit to the economy and the economy and the structure of interest rates with a view achieving as sustainable rate of economic growth prices stability and balance of payment equilibrium.
However, unemployed can be defined an the state of not being employed, therefore not contributing to the labour force of the nation of the mot alarming is the persistence of unemployment, increase and decrease in unemployment is always experienced everyday.  To be unemployed can signify in addition to the common meaning of being without a job, merely to be at leisure or when applied, say to capital to be at leisure or when applied say to capital to be unused or idle.  The worldwide economic depression of the early 80s caused a rapid deterioration in Nigeria economy.  Industrial output shrank to an all time low and commercial activities where consequences reduced, leading to the loss of employment opportunity for millions of Nigeria.  By the end of 1985, the unemployment situation in Nigeria has reached desperate and alarming proportions.
LITERATURE REVIEWOn the theoretical level, both Keynesians and the monetarists have considered the issue of unemployment and monetary policy a defending way of transmission mechanisms.  Their arguments fuss essentially on whether monetary or fiscal policy is able to directly affect real variables as employment but their various lines of demonstrations would not be repeated here as the school of thought (the monetarist) favour the use of the monetary policy to solve the unemployment problem.This they argued would be transmitted through other variables as interest rate and output.
Based on the theme monetary phenomenon quantitative approaches have been taken in relation to policy making and unemployment by researching.  These are rational expectations monetary models such as those of Lucas. (1972, 1973).  Challe (1975) and Barno (1976) and Muth (1961) when stipulated and confirm that the government in its monetary policy is able to affect real economic variable like the unemployment rate or the level of output, although the first two studies differentiate the monetary variable into expected and unexpected in the carrying out their investigation.  Barno (1976) took a step further to find a correlation and the feedback affects of these variable – money growth and unemployment in Nigeria.  He estimated series of equations for money growth and unemployment with each having its logged values serving as explanation variable(s) among others for the other.  His conclusions, which are of relevant to this study elites that increases in federal expenditure above its normal level reduce unemployment as an independent variable.