Testing the validity of monetary misperception hypothesis in Nigeria: evidence from ARDL Model

Abstract

This research work testing the validity of monetary misperception hypothesis in Nigeria covering the period of 1985-2023, the data were analysed using Descriptive statistics and Correlation, Augmented Dickey-Fuller (ADF), Phillip-Perrons unit root test and
Autoregressive Distributive Lag (ARDL) are employed, to carry out this analysis. Results of the study revealed that money supply (M2) shows a positive and statistically significant at 5% level, while actual inflation rate (AINFR), actual interest rate (AINR) and exchange rate (EXCH) value shows a negative sign and statistically insignificant at 5% level, except AINFR is significant, there is long-run impact perception of money supply on economic growth in Nigeria based on ARDL long run. This study concludes that there is a long run impact of monetary misperception hypothesis in Nigeria. A study recommends that, since economic actors base their decisions on local prices, they may incorrectly interpret inflation as a relative price movement. The public's learning from observable policy acts is a significant role in changing attitudes about monetary policy. Reasonable expectations: as people gain knowledge, their misconceptions diminish.