Effect of economic policy uncertainty on agricultural growth in Nigeria

Abstract

This study analysed the long- and short-run effect of economic policy uncertainty on agricultural growth in Nigeria. Annual data was collected from secondary sources and analysed using the autoregressive distributed lag (ARDL) model and the associated bounds test. The highest volatility was exhibited by monetary policy uncertainty (MPU) (2.522), followed by consumer price index (CPI) (1.968). The fiscal policy uncertainty had the lowest volatility (0.179). The result of the bounds test showed that economic policy uncertainty shares a long-run relationship with agricultural growth. The effect of economic policy uncertainty on agricultural growth in the long run is negative, with the coefficient of MPU, FPU and TPU being -0.004, -0.218 and -0.507 respectively. In the short run, the effects of all the economic policy uncertainty variables on agricultural growth and welfare are negative and significant, both in contemporary (current) and in lags. A stable economic policy encourages agricultural growth.