Open Market Operations and Macroeconomic Stability in Nigeria: An Application of Co-Integration and Error Correction Modeling

Shehu Usman Rano, Aliyu (2005): Open Market Operations and Macroeconomic Stability in Nigeria: An Application of Co-Integration and Error Correction Modeling. Published in: Journal of Social and Management Sciences (JOSAMS), (3 November 2006): pp. 34-50.

Abstract

This paper seeks to empirically assess the impact of indirect tool of monetary control on macroeconomic stability in the Nigerian economy. Four key areas were modeled using a static model. Results from both static and dynamic models were presented and the latter model yields more consistent and significant coefficients. Further, the error correction term in the four models was significant and correctly signed. The paper established case for macroeconomic stability through effective conduct of OMO operations in the long run. It supports the recapitalization measure of the CBN aimed at strengthening the financial system and better performance of the economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Open market operations, macroeconomic stability, co-integration, error correction
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies

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