摘要：The unending debate among policy makers, researchers and market analysts on the suitability of monetary policy rule over discretion prompted the development of models to determine and predict the possible future path of monetary policy. Proponents of rule favour commitment to a specific rule while opponents, although agree with the proponents to some extent but to a large extent prefer discretion, with the notion that central banks cannot outsource critical issues of monetary policy decision making to a simple mechanics of rule. This study determined the applicability of McCallum rule, within the context of bounds test, to Nigeria’s monetary policy framework, using data from 1989Q1 to 2013Q2. With a positive monetary response factor and potential output as well as negative velocity, monetary base can be varied to enhance output growth at low inflation rate, thus guarantees output stability perhaps in the long-run, hence supports the application of the rule by the Central Bank of Nigeria (CBN). The study, however, suggested the introduction of additional monetary variable to the rule to make it more robust as well as constant monitoring of velocity of monetary base considering the observed volatility of the variable during the studied period.
关键词：McCallum rule; Taylor rule; Monetary policy; GDP
