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

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  • Asuamah Yeboah, Samuel

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.

Suggested Citation

  • Asuamah Yeboah, Samuel, 2026. "Does Fertiliser Use Respond to Policy and Price Shocks? Evidence from a Persistence Framework," MPRA Paper 128697, University Library of Munich, Germany, revised 07 Apr 2026.
    • Handle: RePEc:pra:mprapa:128697
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    References listed on IDEAS

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    1. Daniel S. Hamermesh & Gerard A. Pfann, 1996. "Adjustment Costs in Factor Demand," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1264-1292, September.
    2. Gideon Danso-Abbeam & Lloyd J. S. Baiyegunhi, 2019. "Does fertiliser use improve household welfare? Evidence from Ghana’s cocoa industry," Development in Practice, Taylor & Francis Journals, vol. 29(2), pages 170-182, February.
    3. Robert E. Lucas & Jr., 1967. "Adjustment Costs and the Theory of Supply," Journal of Political Economy, University of Chicago Press, vol. 75(4), pages 321-321.
    4. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
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    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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