Petrol Pump Prices Fluctuation and Agricultural Productivity in Nigeria (1970- 2016): A Vector Error Correction Approach

London Journal of Research in Science: Natural and Formal
Volume | Issue | Compilation
Authored by Aniekan Akpaeti , Namso N. Frank, Ubong H. Luke
Classification: FOR Code: 070199
Keywords: petrol pump price; agricultural productivity; impact; fluctuation; vector error correction model; economy.
Language: English

Petrol in Nigeria's economy serves as intermediate input to production. Change in price, quality and quantity affects agricultural productivity and profitability. This study assesses the petrol pump prices fluctuations and its impact on agricultural productivity from 1970-2016 using ordinary least square and multivariate Vector Error Correction framework respectively. Findings revealed that a positive growth rate (7.86%) had a negative impact on the economy in the long run while the VECM results showed that petrol price significantly impacted negatively on agricultural productivity and key macroeconomics policies variables both in the long and short run. This was because low agricultural productivity and high interest rate would discourage investment during this period. The study recommends full deregulation policies of petroleum downstream sector by the government which will not hamper the productivity of the agricultural sector while ensuring check and balances (using anti-corruption agencies) in the Nigeria National Petroleum Corporation for financial prudence.



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