EFFECTS OF MONETARY POLICY ON AGRICULTURAL GROSS DOMESTIC PRODUCT PERFORMANCE IN NIGERIA (1970-2018)

A. J. Arigor, I. A. Asuquo and O. B. Ibeagwa

Nigerian Journal of Agricultural Economics, 2021, vol. 11, issue 01

Abstract: The study analysed the effects of monetary policy on Agricultural Gross Domestic Product performance in Nigeria, 1970-2018. The specific objectives of the study were to determine the effect of; Exchange rate (EXR), monetary policy rate (MPR), Broad money supply (M2), Liquidity ratio (LIQ), Lending rate (LRT), Reserves deposit money bank (RCBN), Credit by commercial banks to Agric. sector (CREDIT), Inflation (INF) on the Agricultural Dross Domestic Product (AGDP) in Nigeria. Augmented Dickey-Fuller and Philip Peron unit root tests was conducted on the specified time series. It was observed that only two variables; inflation (INF) and liquidity ratio (LIQ) were stationary at levels while others; (CREDIT, DCBN, INT, M2 and MPR) became stationary at first difference. The co-integration and error correction models (ECM) technique was employed in the analysis. The results revealed that in the long run; exchange rate and credit to the agricultural sector were positively signed and significant at the 1 & 5 % levels respectively, while inflation rate was significant at 10 %. In the short run, there exist a negative relationship with respect to lending rate, monetary policy rate and credit to the agricultural sector and are significant at 1%, 10%, and 10% respectively while inflation was positively related to Agric. GDP and is significant at 5%. The findings call for appropriate short- and long-term economic policy packages that should stimulate investment opportunities in the agricultural sector to increase agricultural GDP performance. Appropriate policy package to stabilize inflation rate in the country should be implemented.

Keywords: Agricultural; and; Food; Policy (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ags:naaenj:333626

DOI: 10.22004/ag.econ.333626

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