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Today fiscal and monetary policy instruments are inextricably linked in
macroeconomic management as the macroeconomic variables are in-
terwoven. The broad objective is to analyze the impact of fiscal and
monetary policy instruments on the trade balance in Nigeria. This study
uses the cointegration method and ordinary least square estimation to
examine the impact of fiscal and monetary policy on Nigeria's trade bal-
ance from 1981 to 2018. The co-integration test confirms the existence of
a long-run relationship between monetary policy as measured by broad
money supply and fiscal policy as measured by government spending,
taxation, and trade balance. The empirical findings revealed that the se-
lected monetary and fiscal policy variables did not improve Nigeria's
trade balance during the study period. As a result, the study recom-
mended that the government encourage trade policies that increase
exports to attract foreign exchange inflows and foreign investments.
