An empirical analysis of balance of payment in Nepal using the monetary approach

A major challenge to the Nepalese economy is the persistence disequilibrium in the balance of payments. This is a general economic phenomenon in most developing countries. This paper analyzes the balance of payments for Nepal using a monetary approach using an annual data set from FY 1990/91-FY 2015/16. The main objective of this paper is to find whether the monetary variables that are money supply, income, price level, interest rate and net domestic assets are responsible to produce fluctuations in the balance of payment  of Nepal or not. To achieve this objective, the paper applies a multiple regression model for time series data.