Does Nigeria’s Growth in Education Increase with Expansionary Monetary Policy?

Abstract

This study investigated whether expansionary monetary policy contributed to Nigeria’s educational growth through cointegration using the auto-regressive distributed lag (ARDL) method for the years 1981–2021. The bounds tests indicate that the variables of interest are long-term correlated. The corresponding equilibrium correction supported the existence of a long-term relationship. The findings also show that, in the short run, there is no Granger causality between interest rates, inflation, and education growth. Empirical analysis reveals a highly significant relationship between these macroeconomic variables and the growth of education. Furthermore, the findings show that the high interest rate won’t have a significant impact on low-income Nigerians because Nigeria’s private sector receives relatively little domestic credit. The paper recommends that the government develop and implement policies that ensure favourable interest rates for financing education. This could entail offering grants, scholarships, or low-interest student loans in order to increase the accessibility and affordability of education.