Exchange Rate Depreciation and the Nigeria’s Agricultural and Industrial Sectors

Isaac, Samuel Effiong *

Topfaith University, Mkpatak, Nigeria.

Okon, Joel Isaac

Department of Statistics, Central Bank of Nigeria, Abuja, Nigeria.

Arinze, Nnaemeka Peter

Department of Statistics, Central Bank of Nigeria, Abuja, Nigeria.

Odii, Nwanneka Mmahi

Department of Statistics, Central Bank of Nigeria, Abuja, Nigeria.

*Author to whom correspondence should be addressed.


Abstract

This study examines the effect of exchange rate depreciation on the agricultural and industrial sectors of the Nigerian economy using annual data from 1981 to 2021 in an autoregressive distributed lag (ARDL) model. The findings show that the effect of exchange rate depreciation on industrial and agricultural output was fairly similar. Exchange rate depreciation, inflation, interest rate, and government expenditure have negative effects on industrial output in the short run and positive effects in the long run. Similarly, past agricultural output, exchange rate depreciation, and government expenditure have negative effects on agricultural output in the short run and a positive effect in the long run. Inflation also has a long-term positive effect on agricultural output. Government expenditure had the most substantial long-run effect on industrial and agricultural output. The study shows the need to manage high exchange rate volatility to facilitate realistic forecasts and sound production decisions in the agricultural and industrial sectors. The findings of this study underscore the importance of considering both short-run dynamics and long-run adjustments in understanding the effects of exchange rate depreciation and other economic variables on the industrial and agricultural sectors.

Keywords: Exchange rate depreciation, output, short-run effects, long-run effects, Autoregressive distributed lag model, Nigeria


How to Cite

Samuel Effiong, Isaac, Okon, Joel Isaac, Arinze, Nnaemeka Peter, and Odii, Nwanneka Mmahi. 2024. “Exchange Rate Depreciation and the Nigeria’s Agricultural and Industrial Sectors”. Asian Journal of Economics, Business and Accounting 24 (7):393-406. https://doi.org/10.9734/ajeba/2024/v24i71418.

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