Analysis of the Impact of Selected Macro-Economic Variables on Balance of Payments in Nigeria

Given that Nigerian economy has recorded unfavourable Balance of Payment (BOP) positive in recent years, it becomes imperative to study the impact of selected macroeconomic variables on BOP in Nigeria. This study therefore sought to determine the impact of exchange rate, inflation rate, interest rate and money supply on BOP in Nigeria. This study used secondary data sourced from Central Bank of Nigeria Statistical Bulletin (2021) in its analysis. The study employed ARDL to estimate the short run and long run impact of the selected macroeconomic variables on BOP in Nigeria. The ARDL bound co-integration showed a long run relationship between BOP and selected macroeconomic variables in the country. The study recommends that the policy makers should take keen interest on how best to improve the value of Nigeria’s export to the world; this will help bring to equilibrium the exchange rates and inflation that play a crucial part in determining the balance of payments. In addition, policies should be put in place to fund government plan of work for a period of time than public borrowing in the case of money supply and interest rate that has led to the increment on Balance of payment (BOP) deficit.