MONETARY POLICY AND AGRICULTURAL PRODUCTIVITY IN NIGERIA
International journal of social science and economic research
This study examines the impact of monetary policy on the agricultural sector performance in Nigeria from 1981 to 2018. In specific terms, the study investigated the impact of Money Supply (MS2), Interest Rate (INR), Credit to the Agricultural Sector (CREDAGR), and Broad Money Growth Rate (BROADMGR) on the Performance of Agricultural sector. The data used in this study were sourced from CBN statistical bulletin. The Autoregressive Distributed Lag (ARDL) econometric technique was used to estimate
... as used to estimate the agricultural performance model. The choice of this econometric technique is premised on the Augmented Dickey-Fuller (ADF) and the Phillip-Perron (PP) test which shows that not all the time series are integrated of order one and the existence of a long run relationship as shown by the bound test. The ARDL result revealed the existence of long run relationship among the variables. From the findings, there is evidence of variation in the effect of the examined monetary policy instruments on the performance of the agricultural sector. This study concludes that the effect of increase in money supply is not instantaneous but rather requires at least three years before yielding positive and significant impact on the performance of the agricultural sector. Interest rate proved to be an inconsequential monetary policy instrument for influencing performance in the agricultural sector. Growth rate in broad money started impacting positively on performance of the agricultural sector the following year after an increase in a fiscal year. The study therefore recommends an expansionary monetary policy option with regards to growth rate in broad money (i.e. M2) and bank credit to the agricultural sector. Less attention should be paid to interest rate in effort to boost growth in the agricultural sector in Nigeria.