Inflation and Agricultural Growth in Nigeria: An Empirical Analysis of Nonlinear Responses to Inflation Changes (1981–2023)

The study examines the impact of inflation on agricultural growth in Nigeria using the Nonlinear Autoregressive Distributed Lag (NARDL) model. It focuses on the effects of positive and negative inflation, agricultural expenditure, and the monetary policy rate (MPR). The results show that positive inflation has a short-term positive effect on agricultural growth by increasing nominal prices and potentially boosting farmer revenues. However, this effect diminishes over time due to rising input costs and market inefficiencies. Negative inflation does not significantly affect agricultural growth, suggesting that inflation below a certain threshold does not significantly contribute to agricultural performance. The study also highlights the importance of policy stability, efficient agricultural expenditure, and managing inflation to maintain long-term agricultural growth. Policymakers should focus on managing inflationary pressures, promoting investment in agricultural infrastructure, and enhancing research and development, particularly in climate-resilient crop varieties. These measures are essential for sustaining agricultural productivity in Nigeria.