MONETARY POLICY ASYMMETRY AND MACROECONOMIC FUNDAMENTALS IN NIGERIA: DOES UNCERTAINTY MATTERS?
That monetary policy is made in an environment of substantial uncertainty is only a commonplace knowledge. But for the peculiar vulnerability of monetary authorities to exogenous conditions in developing economies, hypothesis was set up for the role of uncertainty in the asymmetry effect of monetary policy. Essentially, both money supply and interest rate process were explored using linear and non-linear ARDL to show that political pressure such as variability in government borrowing has the potential to accelerate the asymmetry effect of monetary policy. It is observed that the asymmetry effect of monetary policy appears to be sensitive to the choice of monetary policy indicator. Based on these findings, it is recommended that monetary authorities must consider not only the effectiveness or otherwise of monetary policy instruments to affect the target policy goals, but also recognized the fact that not all the target variables react in a similar way to expansionary and contractionary monetary policy shocks.
Monetary Policy Shocks; Asymmetry Effects; Uncertainty; Developing Economies