Does Fertiliser Use Respond to Policy and Price Shocks? Evidence from a Persistence Framework

Samuel Asuamah Yeboah

MPRA Paper from University Library of Munich, Germany

Abstract: This study examines whether fertiliser-use intensity in Ghana responds to policy and price shocks by modelling input behaviour as a persistence-driven process. Using annual data from 1960 to 2020, a trend-augmented AR(1) model is estimated to capture both short-run adjustments and long-run structural dynamics. The results reveal a high persistence coefficient, indicating that more than ninety per cent of past fertiliser use carries over into the current period, consistent with adjustment-cost theory and gradual learning. A significant negative deterministic trend suggests a long-run decline in fertiliser-use intensity despite recurrent subsidy interventions. Diagnostic tests confirm strong volatility persistence linked to global price shocks, exchange-rate depreciation and domestic supply constraints. The findings demonstrate that fertiliser-use behaviour adjusts slowly, with policy and price shocks producing long-lived rather than transient effects. The study contributes originality by applying a persistence framework to fertiliser use, quantifying the duration of shocks and identifying structural decline. Policy implications emphasise the need for stable multi-year fertiliser programmes, macroeconomic stabilisation and sustainability-oriented nutrient management. The results provide a dynamic understanding of fertiliser-use behaviour that can support more resilient agricultural-input policies in Ghana.

Keywords: Persistence; Policy shocks; Price shocks; Dynamic adjustment; Agricultural input markets; AR(1) model (search for similar items in EconPapers)
JEL-codes: C22 Q12 Q18 Q56 (search for similar items in EconPapers)
Date: 2026-03-14, Revised 2026-04-07
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