Responses of Rice Output to Monetary Policy Shock in Nigeria From 1981-2020

Abstract

The research looked at how monetary policy shocks affects rice output in Nigeria. The study made use of time series data spanning the year 1981 to 2020 obtained from the Central Bank of Nigeria (CBN) and National Bureau of Statistics (NBS). The shocks were detected using the Vector Auto-Regressive model (VAR). The study revealed that unit shocks in interest rates, inflation, and exchange rates all harmed rice output with rice output responding more to a unit shock in interest rate. Monetary policy shocks have both positive and negative effects on rice output at different periods. This study concluded, however, that the timing of monetary policy instruments change has serious implications for rice output, and that rice output can bring about positive change in Nigeria's agricultural output if monetary policy instruments are well managed. The study recommended that the monetary authority should ensure that various policies are implemented to ensure that the interest rate to the agricultural sector is within a single digit, accessible, affordable, and sustainable to ensure greater productivity in the sector, as it accounted for the greatest shock in comparison to other monetary variables, the monetary authority should pursue an exchange rate policy that encourages investment in the Nigerian economy's real sector while maintaining market stability.