Economic and Financial Review
Publisher
Central Bank of Nigeria, Research Department.
Keywords
Stabilization policy, Alternative exchange rate, Exchange rate regimes, Macro-model approach, Mundell-Fleming model, Fiscal policy
Abstract
The study examines the effectiveness of stabilization policy in Nigeria under alternative exchange rate regimes. A simple version of the Mundell - Fleming model was adopted. The results indicate that the exchange rate regime has implications for the outcome of any stabilisation measure adopted, and further, it is observed that the success of debt management strategies will depend on the exchange rate regime. The study argues that the impact of fiscal policy on the current account balance also depends on the exchange rate regime. It arrived at these conclusions based on certain assumptions such as static expectation and by ignoring price movement. In sum, the study supports the use of a flexible exchange rate regime by an indebted but reforming economy like Nigeria.
Issue
37
Volume
1
Recommended Citation
Dipo, B.T. and Kolawole O.W. (1999). Stabilization policy in Nigeria under alternative exchange rate regimes: a postulated empirical macro-model approach. Economic and Financial Review, 37(1), 21-35.