Dissecting Monetary Policy Effects On Local Inflation Trends And Regional Linkages In Nigeria Abstract: This Study Evaluates The Relationship Between Monetary Policy Shocks And Sub-National Inflation Dynamics In Nigeria, Using The Svar Framework. Furtherm
Amina Zainab
Department of Research, Financial Sector Division, Central Bank of Nigeria, Abuja, Nigeria
Abstract
This study evaluates the relationship between monetary policy shocks and sub-national inflation dynamics in Nigeria, using the SVAR framework. Furthermore, using the Diebold-Yilmaz (DY) methodology, it also examines the extent of inflation volatility spillovers among the regions. Results show that monetary policy shock generates a heterogeneous but corresponding insignificant influence on sub-national inflation in Nigeria. We also found Department of Research, substantial evidence of spillovers among the regions. The South-West, Financial Sector Division, North-East and South-East regions were found as the only resilient regions Central Bank of Nigeria, and net transmitters of inflation volatility to other regions, while the South-Abuja, Nigeria South was the most vulnerable region, especially to shocks from the SouthEmail: East. These findings suggest that an exogenous monetary policy shock is not sufficient to address sub-national inflation dynamics in Nigeria. Rather, a well-targeted policy may be required to address the challenge, including strengthening inter-regional network connectivity and addressing persistent insecurity challenges that have stamped its roots in the North-East and SouthEast regions