THE IMPACT OF MONETARY POLICY ON BALANCE OF PAYMENT IN NIGERIA

THE IMPACT OF MONETARY POLICY ON BALANCE OF PAYMENT IN NIGERIA

ABSTRACT
This research work is centered on the impact of Monetary Policy on Balance of Payment in Nigeria with the scope being from 1970 to 2006.
The Central Bank of Nigeria (CBN) monetary policy instruments were discussed and the IS-LM framework of an open economy was also discussed including the CBN monetary policy guideline from 1970 to date which is the major channel through which the Central Bank’s activities are based on.  The ordinary least square estimator (OLS) was the analysis adopted and from analysis and result obtained it indicates a negative impact of monetary policy on balance of payment.  However, recommendations were made with respect to the CBN’s to adopt the Charles Soludo new exchange rate proposal 2007 and to shift emphasis to non-oil sectors of the economy in order to have a viable balance of payment.

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