Impact of monetary policy and balance of payment on price stabilization in Nigeria

This paper presents an empirical analysis of the impact of monetary policy and balance of payment on price stabilization in Nigeria over the period 1980 – 2015. Employing variance decomposition test, we found out that growth rate of broad money supply and lending rate causes fluctuation on balance of payment, while growth rate of broad money supply and monetary policy rate causes fluctuation in Inflation. Therefore, this study concludes and recommends that monetary authorities should be strict while using tools like broad money supply, monetary policy rate and lending rate. This is because the monetary policy tools exerted little influence on the target variables.