Threshold Effects of Economic-Policy Uncertainty on Food Security in Nigeria

Goodness C. Aye (), Lydia N. Kotur and Peter I. Ater
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Goodness C. Aye: Department of Agricultural Economics, Joseph Sarwuan Tarka University, Makurdi 970001, Nigeria
Lydia N. Kotur: Department of Agricultural Economics, Joseph Sarwuan Tarka University, Makurdi 970001, Nigeria
Peter I. Ater: Department of Agricultural Economics, Joseph Sarwuan Tarka University, Makurdi 970001, Nigeria

JRFM, 2025, vol. 18, issue 2, 1-20

Abstract: The study investigated the threshold effects of economic-policy uncertainty on food security in Nigeria, covering the period from 1970 to 2021. Summary statistics and unit root tests were employed for preliminary analysis, while the threshold regression model was used to realize the key objective of the study. The results revealed that adult population (ADULTPOP), environmental degradation (ENVT), exchange rate uncertainty (EXRU), financial deepening (FINDEEP), food security (FS), government expenditure in agriculture uncertainty (GEAU), global economic uncertainty (GEU), inflation (INF), and interest rate uncertainty (INRU) showed positive mean, maximum, and minimum values over the study period. Most variables exhibited low volatility, except for inflation (SD = 15.619) and interest rate uncertainty (SD = 8.435), which had relatively higher volatility. ADF and PP unit root tests indicated that ADULTPOP, FINDEEP, and FS had unit roots in levels, but became stationary after first differencing (integrated of order one). ENVT, EXRU, GEAU, GEU, INF, and INRU were stationary in level, indicating they were integrated of order zero. The result showed a threshold value of 0.077 for global economic uncertainty (GEU). Above this threshold, exchange rate uncertainty (EXRU) had a statistically significant effect on food security ( p = 0.031). Non-threshold variables such as adult population ( p = 0.000) and environmental degradation ( p = 0.000) also had significant effects on food security. The study thus provided evidence of threshold effects of economic-policy uncertainty on food security. The study recommends that policymakers incorporate threshold values in policy implementation to mitigate risks linked to high economic-policy uncertainty. The Government is also advised to establish strategies for stabilizing exchange rates or alleviating their harmful effects on food supply, which may be crucial for achieving food security.

Keywords: economic; policy; uncertainty; economic-policy uncertainty; food security; threshold effect (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
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