Investigating the Effect of Macroeconomic Variables on Agricultural Output in Nigeria

Abstract

The research work investigated the effect of macroeconomic variables on agricultural output in Nigeria. The study used annual data spanning from the period 1995 to 2020. The agricultural output growth represented the explained variable while money supply, commercial bank loan on agriculture, exchange rate, interest rate, recurrent government expenditure on agriculture and inflation rate represented the explanatory variables which served as the selected macroeconomic variables under study. The stationary of the variables were checked using the Augmented Dickey-Fuller test. The long run relationship was tested using the Johansen Co-integration technique. The OLS analysis was computed which shows that the model is statistically significance, judging with the p-value of the F-statistic. The analysis also presented that money supply, exchange rate and inflation have a positive relationship with agricultural output within the given period of study while commercial bank loan on agriculture, interest rate and recurrent government expenditure on agriculture have a negative link with the explained variable. Based on the findings, the researchers recommended among others things, that a favorable interest rate should be placed for farmers to easily access the loans of the financial institutions, which will ensure increase in the productivity of the sector.