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

Author

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

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.

Suggested Citation

  • Aye, Goodness C. & Kotur, Lydia N. & Ayoola, Josephine B., 2024. "Beyond the threshold: Unraveling the effects of economic policy uncertainty on agricultural growth in Nigeria," IAAE 2024 Conference, August 2-7, 2024, New Delhi, India 344261, International Association of Agricultural Economists (IAAE).
    • Handle: RePEc:ags:iaae24:344261
    DOI: 10.22004/ag.econ.344261
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    References listed on IDEAS

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    1. Xiaoyong Xiao & Qingsong Tian & Shuxia Hou & Chongguang Li, 2019. "Economic policy uncertainty and grain futures price volatility: evidence from China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 11(4), pages 642-654, August.
    2. Haiqiang Chen & Terence Chong & Jushan Bai, 2012. "Theory and Applications of TAR Model with Two Threshold Variables," Econometric Reviews, Taylor & Francis Journals, vol. 31(2), pages 142-170.
    3. Zulfiqar Ali WAGAN & Zhang CHEN & Hakimzadi SEELRO & Muhammad Sanaullah SHAH, 2018. "Assessing the effect of monetary policy on agricultural growth and food prices," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(11), pages 499-507.
    4. Xiaoyong Xiao & Qingsong Tian & Shuxia Hou & Chongguang Li, 2019. "Economic policy uncertainty and grain futures price volatility: evidence from China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 11(4), pages 642-654, August.
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