EMPIRICAL ANALYSIS OF THE NIGERIA’S BALANCE OF PAYMENTS DISEQUILIBRIUM
This study examines the factors responsible for Nigeria’s balance of payments disequilibrium within the period 1970-2012. TheTime Series data on seven macroeconomic variables namely; current account, money supply (M2), trade openness, trade balance, inflation, real exchange rate and debt service was collected from CBN statistical bulletin. Ordinary Least Square (OLS) method was employed in analyzing the data, and the findings shows that all the variables used were responsible for balance of payments disequilibrium in Nigeria. The result further suggests that only inflation and trade balance out of the six variables have significant impact on Nigeria’s balance of payments disequilibrium. Besides, all the variables came out with their expected a priori expectations except inflation which displayed positive sign against its expected negative sign. Fiscal and monetary authorities should jointly target inflation using appropriate measures so that Nigeria’s domestic product (export) would be less expensive at the detriment of import in order to prevent current account deficit.Nigerian government should also increase its productive and exporting capacity beyond primary products and crude oilso that the persistent current account challenges would be addressed and economic growth/development would be attained.