IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 7 NO. 2 2021

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Stabilization Policy Measures and Current Account Balance in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach.

Uzoma, Chidoka Nnamaka (Ph.D) & Ekine, Data Irene (Prof.)

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Abstract

This study empirically examined the effects of stabilization policy measures on current account balance in Nigeria for a 40-year time period, from 1980 to 2019. Time series data on current account balance, money supply, interest rate, exchange rate, government expenditure and government tax was sourced from the Central Bank of Nigeria (CBN) statistical bulletin. The study adopted the Auto Distributed Lags (ARDL)/ Bounds testing approach to cointegration to estimate the models. The test for unit root was carried out using the Augmented Dickey-Fuller (ADF) test for stationarity and the result showed that all the variables used in the study were stationary at first difference except for government tax revenue which attained stationarity at levels. The Bounds test result showed that the variables in the model have long run relationship. It was further revealed that monetary policy has been leveraged on to boost the current account balance in Nigeria. The error correction term for models depicted mild speed of adjustment to equilibrium. On the balance, fiscal policy did not effectively play the role of improving current account balance in Nigeria while monetary policy indicators contributed meaningfully to current account balance in Nigeria for the study period. It is therefore recommended amongst others that expansionary measures on fiscal policy should be encouraged as they play vital role in improving the current account balance in Nigeria.

keywords:

Stabilization Policy, Current Account Balance, Autoregressive Distributed Lags and Nigeria

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