EFFECT OF INFLATION, EXCHANGE RATE AND AGRICULTURAL OUTPUT ON ECONOMIC GROWTH IN NIGERIA
Abstract
ABSTRACT
This study examined the effect of inflation, exchange rate and agricultural output on economic growth in Nigeria from 1980-2023 Data employed for this study was elicited from World Bank Data Base-World Developmental Indicators of 2022 and Central Bank of Nigeria Statistical Bulletin of 2022. This study employed economic growth (GDP) which is the dependent variable where inflation (INF), exchange rate (EXR), foreign direct investment (FDI), agricultural output (AGRO) and trade openness (TOP) are independent variables. This study employed Auto Regressive Distributed Lag (ARDL) Model to analyze data; other diagnostic tests such as: stability test, Auto correlation test, Heteroskedasticity test and BreuschGodfrey Serial Correlation LM test were also carried out and they confirmed the validity and reliability of the model employed The long-run ARDL result revealed a significant positive relationship between exchange rate (EXR) Agricultural output (AGRO) and foreign direct investment (FDI) and economic growth in Nigeria over the study period. While inflation (INF) and trade openness (TOP) was found to have a negative and significant effect on economic growth in Nigeria. From the findings of this study, the following policy recommendations are postulated; To increase Agricultural export, the government should implement an appropriate policy mix in other to stabilize and improve the value of the naira to boost agricultural export value. Trade openness should be encouraged in other to increase agricultural export value and improve the standard of living in the country. Interest rates should be reviewed by policymakers and reduced as this will encourage farmers to access Agricultural credit which will improve their productivity and as a result, improve Agricultural export value in Nigeria. Policymakers should promote price stability by mitigating inflationary pressures through inflation targeting which has the potential to stimulate the growth of the Nigerian economy.
KEYWORDS: Economic Growth, Inflation Rate, Exchange Rate, Agricultural Output and Auto Regressive Distributed Lag (ARDL) Model.
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