MONETARY POLICY AND BALANCE OF PAYMENTS DISEQUILIBRIUM IN NIGERIA
- Richard O. Ojike
- Nkechinyere R. Uwajumogu
- Marius Ikpe and Sunday A. Okwor
- ( paper pages. 1 - 23 )
Negative disequilibrium in Nigeria’s external sector has over time defied all measures employed to correct it and ensure equilibrium inthe balance of payments (BOP). To this end, different monetary policies have been adopted and implemented with no appreciabledegree of success. As a result, it is pertinent to examine the effectiveness of these monetary policy measures. This study adoptedthe ARDL bounds test approach, following the monetary approach to BOP adjustment for the analysis. The study used annual data thatcovered the period 1970 to 2016. The findings show that gross national income and cash reserve ratio had significant positive impacton BOP while credit to the private sector and monetary policy rate had negative significant impact on BOP. Interest rate was significantat 10% level while inflation rate had insignificant impact on BOP. Based on these findings, the study concludes that the monetaryapproach to BOP and monetary policy variables are effective for correcting balance of payments deficits in Nigeria. The studyrecommends that the Central Bank of Nigeria (CBN) should curtail the rate of increase in credit to the private sector through stringentmonetary regimes and properly manage the monetary policy variables (monetary policy rate and cash reserve ratio) to solve BOP problemsin Nigeria.
Richard O. Ojike, Nkechinyere R. Uwajumogu, Marius Ikpe and Sunday A. Okwor.
"MONETARY POLICY AND BALANCE OF PAYMENTS DISEQUILIBRIUM IN NIGERIA"
The Nigerian Journal of Economic and Social Studies,
63 (1): 1 - 23.