Thispaper attempts to develop a small size macro-econometric model of Nigeria’seconomy to examine the effects of monetary policy and crude oil price shock onselected macroeconomic variables through forecasting and simulations. The modelcomprises of 19 equations, out of which 12 are behavioral equations, fouridentities and three definitional equations. Ordinary Least Square technique isused to estimate the behavioral equations for the period 1981-2012. Theestimated model parameters are used to perform simulation experiments todetermine the model’s ability to track historical data and to assess thebehavior of the selected macroeconomic variables in response to the changes(shocks) in selected exogenous variables. The results give insight in thefuture path of the main economic variables.?JELclassification numbers: C20, C51, C52, C53, C63, E27, E37?Key Words:Macroeconometric Model, Nigerian Economy, Forecasting.
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