THE BALANCE OF PAYMENTS AS A MONETARY PHENOMENON:AN ECONOMETRIC CASE STUDY OF NIGERIA

THE THRUST OF THIS PAPER HAS BEEN TO INVESTIGATE THE THEORETICAL PROPOSITION OF THE MONETARY APPROACH TO THE THEORY OF BALANCE OF PAYMENTS ADJUSTMENT MECHANISM. THE ESSENCE OF THE APPROACH IS A CONSISTENT INSISTENCE THAT BALANCE OF PAYMENTS IS A MONETARY AND NOT A REAL PHENOMENON AS POSITED BY THE CONVENTIONAL THEORIES. FROM THE VARIOUS TESTS CONCLUDED AND HYPOTHESIS EVALUATED,THE STUDY SUGGESTS THAT THE MANIPULATION OF DOMESTIC CREDIT BY THE MONETARY AUTHORITIES WILL NOT ENHANCE THE BALANCE OF PAYMENT VIABILITY OVER TIME; RATHER THAT INCREASES IN THE LEVEL OF OUTPUT MIGHT IMPROVE THE BALANCE ON CURRENT ACCOUNT.