Monetary policy management implications on the movement of agricultural prices in Nigeria | Zendy

Hassan | Zendy; Makinde Olanrewaju | Zendy

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Monetary policy management implications on the movement of agricultural prices in Nigeria

Author(s) -

Hassan,

Makinde Olanrewaju

Publication year - 2012

Publication title -

african journal of business management

Language(s) - English

Resource type - Journals

ISSN - 1993-8233

DOI - 10.5897/ajbm12.213

Subject(s) - inflation (cosmology) , agriculture , economics , exchange rate , money supply , monetary economics , monetary policy , price level , agricultural economics , ecology , physics , theoretical physics , biology

Price instability is the most serious problem in Nigerian agricultural sector today. Money supply and exchange rate are some perceived factors causing instability in agricultural prices. This study evaluated the long-run neutrality of money supply on agricultural prices; the effect of money supply on agricultural prices; and effect of key macroeconomic indicators on agricultural prices in Nigeria. Using least square estimation, it was observed that money supply had significant impact on agricultural prices and that agricultural prices do not react more sensitively than aggregate price to changes in money supply. Money supply and exchange rate also accounts for 86.2% of variations in agricultural prices. Based on results obtained, it is recommended that the Central Bank of Nigeria should formulate monetary policy that would enhance stability in agricultural prices and also cause a reduction in the level of inflation in the economy. Key words: Price instability, money supply, exchange rate, key macroeconomic indicators, level of inflation.

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