Motivated by lack of consensus on the empirical validity of the Mundell-Fleming trilemma and its development effects, this paper examines the relationship between the trilemma indexes (monetary autonomy, exchange rate stability and capital mobility) and structural reforms with a focus on manufacturing and service value added in Nigeria. The ADRL was applied in addition to other econometrics tools in analyzing the data sourced from various documentary sources. The ARDL bounds test results revealed that the variables are cointegrated. This necessitated the rejection of the null hypothesis of no long run relationship. The short run result shows that lag two of monetary autonomy and contemporaneous value of exchange rate stability have significant positive relationship with manufacturing value added. Manufacturing value added increases by 7.289 percent following a unit increase in monetary autonomy index. Similarly, a unit increase in exchange rate stability triggers 1.372 percent in manufacturing value added in the short run. The long run result revealed that monetary independence exerts significant positive influence on manufacturing whereas capital mobility is negatively related to manufacturing valued added in the long run. The result further indicates the long term effects of the trilemma indexes are statistically insignificant while that of foreign reserve accumulation is found to exert significant positive impact on service value added in the long run. This is a pointer that the policy makers in Nigeria have leveraged on external reserve build-up to buffer shocks in the service sector. On the basis of the findings, it is concluded that the manufacturing sector is the channel through which the policy trilemma drives the process of structural reforms in the Nigeria. Thus, policy makers in Nigeria should allow for more managed floating exchange rate regime and ensure appreciable independence in the monetary policy operation with a view to fostering the process of structural reforms in Nigeria.
This paper tried to investigate the impact of foreign debt on growth in Bangladesh. The annual data series over the period 1972-2010 has been used. The study has been made by using the ARDL (Auto- Regressive Distributive Lag model) model to check the relationship of growth and debt. According findings there is a significant adverse effect of debt on growth in Bangladesh. In Bangladesh External debt service is a burden for its nation and it makes the GDP slows down. This study recommended that Bangladesh should find out any option of debt cancellation and must increase human development and more infrastructure development. It is also recommended that debt management should be effective and fair, and Exports, FDI and Remittances are helpful for the growth of Bangladesh.