International Journal of Research and Reviews in Social and Applied Sciences

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ANALYSIS OF THE EFFECT OF INFLATION ON PRICES AND OUTPUT OF SELECTED AGRICULTURAL PRODUCE IN NIGERIA

Abstract

Analysis of the effect of inflation on prices and output of selected agricultural produce in Nigeria (1992-2016) was carried out. Data for the study were collected from National Bureau of Statistics (NBS), Central Bank of Nigeria (CBN), World Bank and Benue Agricultural and Rural Development Authority (BNARDA). Inferential statistics such as Augmented Dickey Fuller (ADF) test, Co-integration analysis, Vector Auto-Regressive (VAR) were used. The ADF test was used to test for the presence of unit roots due to the time series nature of the data. All the variables attain stationary at first difference except inflation GDP deflator which attains stationary at level at 0.01 probability level which necessitated the application of Co-integration analysis. The Co-integration test shows that the trace test of 89.20910 is greater than 15.49471 for maize price, trace test of 9.180504 is greater than 3.841466 for rice price, trace test of 19.06995 is greater than 3.841466 for yam price and trace test of 8.343064 is greater than 3.84166 for cassava price indicate that co-integration exist between inflation and prices of selected agricultural produce at 0.05 level of significance. Since long run relation exist between inflation and prices of selected agricultural produce, VAR was used to model both long run and short run relationship between the variables, The result of VAR indicates that inflation has a positive significant effect on the prices of selected agricultural produce in that, the chi-square calculated of 10.37, 9.99, 12.66, 15.41 for maize price, rice price, yam price and cassava price which is greater than chi-square tabulated of 5.99  at 2 df shows that inflation has significant effect on prices of selected agricultural produce in the long run. The study based on its findings recommends that policies that will buffer the agricultural sector from effect of inflation in the long and short run should be enacted.

ONDOMA, M.H.; AWUNA, J.M., OCHIGBO, A.E.
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