Causal Dynamics of Interest Rate, Inflation, and Agricultural Productivity in Nigeria: A Policy Perspective
Title
Causal Dynamics of Interest Rate, Inflation, and Agricultural Productivity in Nigeria: A Policy Perspective
Authors
Dorcas N. Munaji
Keywords
Agriculture | Nigeria
Publication Details
Vol: 11; No: 3; Sep. 25 | ISSN: 2455-3921
Abstract
The study examined the causal dynamics of interest rate and inflation on agricultural productivity in Nigeria. The aim was to ascertain the causality of these macroeconomic variables on productivity of the agricultural sector and how government policies/ intervention schemes such as subsidy removal in 2012, 2016, and 2020 impacted the economy. Quarterly time series data were used which covered a span of 11 years (2012-2022) i.e. 44 quarters. The independent variables analyzed include interest rate, inflation rate, guaranteed loans from ACGSF, exchange rate, and deposit money bank loans to the agricultural sector. Agricultural GDP stood as the dependent variable. The econometric models used in the research included the ADF and Granger causality model. Results of the Granger causality test revealed a unidirectional relationship between AGDP and INF. The recommendation therefore includes targeted interventions, such as conditional cash transfers or input subsidies also, ensure that subsidy removal is paired with robust support mechanisms, such as food vouchers, transportation subsidies, and access to affordable credit and clarity in how the savings from subsidy removal are reinvested to build trust in government policies.
Corresponding Author
Dorcas N. Munaji, Department of Economics, Baze University, Abuja, Nigeria
