The Balance Of Payment As A Monetary Phenomenon: An Econometric Study Of Nigeria (1986 - 2016)
Journal Title: International Journal of Humanities and Social Science Invention - Year 2018, Vol 7, Issue 10
Abstract
The paper econometrically analyses of the balance of payment as a monetary phenomenon: an econometric study of Nigeriafrom 1986 to 2016. Unit root test, cointegration test, pairwise granger causality test andAutoregressive Distributed Lag (ARDL) modelwere the tools used to establish the relationship between exchange rate and balance of payment. The results revealed a negative and statistically significant relationship in both short-run and long-run between balance of payment and exchange rate of the Nigerian Economy during the period under review. The Granger Causality/Block Exogeneity further revealed that the major determinant of exchange rate is real GDP. It further reveals that the nexus among the variables is indeterminate. Therefore it was recommended amongst other things that the policy of exchange rate depreciation should be maintained through the government intervention guide. Government through Central Bank of Nigeria (CBN) should apply expenditure reducing monetary policies through money supply and domestic credit to promote favourable BOT which invariably could stabilizes the BOP.
Authors and Affiliations
Professor N. M. Gatawa, Sunday Elijah, Mohammed Umar
Keywords
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