Beyond the threshold: Unraveling the effects of economic policy uncertainty on agricultural growth in Nigeria

Goodness C. Aye, Lydia N. Kotur and Josephine B. Ayoola

No 344261, IAAE 2024 Conference, August 2-7, 2024, New Delhi, India from International Association of Agricultural Economists (IAAE)

Abstract: The study investigated the threshold effects of economic policy uncertainty on agricultural growth in Nigeria using annual time series data from 1970 to 2021. Descriptive analysis revealed positive mean, maximum, and minimum values for variables such as adult population (ADULTPOP), environmental degradation (ENVT), exchange rate uncertainty (EXRU), financial deepening (FINDEEP), government expenditure in agriculture uncertainty (GEAU), global economic uncertainty (GEU), inflation (INF), and interest rate uncertainty (INRU). However, agricultural growth (AG) showed a negative minimum value. Most variables exhibited low volatility, except for inflation and interest rate uncertainty, which demonstrated higher volatility. Unit root tests indicated that some variables initially had unit roots in levels but became stationary after first differencing (integrated of order one), while others were stationary in levels (integrated of order zero). The study employed a threshold regression model, revealing a threshold value of 0.034 for global economic uncertainty (GEU). Above this threshold, exchange rate uncertainty (EXRU) and interest rate uncertainty (INRU) significantly impacted on agricultural growth. Non-threshold variables, including adult population, financial deepening, environmental degradation, and inflation, also had significant effects on agricultural growth. The study provides policymakers and stakeholders with valuable insights into the optimal management of economic policy uncertainty for sustainable agricultural development.

Keywords: Agricultural and Food Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 21
Date: 2024-08-07
New Economics Papers: this item is included in nep-agr
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Persistent link: https://EconPapers.repec.org/RePEc:ags:cfcp15:344261

DOI: 10.22004/ag.econ.344261

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