Impact of Monetary Policy on Importation in Nigeria (1990-2020)

Abstract

This study ascertained the effect of monetary policy on importation in Nigeria covering the period 1990 – 2020. Data for the study were extracted from the Central Bank of Nigeria (CBN) statistical bulletin. The method of data analysis used is the linear regression method with the application of the Error Correction Model (ECM). The major findings of the study reveal that interest rate has a negative and insignificant effect on importation in Nigeria, exchange rate has a positive and insignificant effect on importation in Nigeria, broad money supply has a positive and significant effect on importation in Nigeria and there is a causal relationship between importation, trade openness and broad money supply. It is therefore the recommendation of the study that there is need for boosting domestic production so as to contend high level of import that may have a detrimental effect on our external reserves. Secondly; the Nigerian authorities should carry out reforms that would enhance the role of interest rate in order to mobilize funds for trade purposes.