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Monetary policy involves the process by which the monetary authority of a country using monetary policy variables controls the supply, availability and cost of money in an economy for the sole aim of attaining greater output. The study examines the impact of monetary policy variables on the agricultural sector in Nigeria from 1986 – 2013. Employing the ordinary least square (OLS) regression method, a multiple regression equation to check the economic relationship between agricultural output with Agriculture Gross Domestic Product (AGDP) as the dependent variable, and Money Supply (MS), Interest Rate (INT), Monetary Policy Rate (MPR) and Inflation Rate (INF) as explanatory variables was carried out. The unit root test to check for stationarity of variables and the Johansen cointegration test to establish long run equilibrium relationship between the dependent and explanatory variables were employed. The study revealed that there exist a relationship between monetary policy and agricultural sector performance in Nigeria with an increase in the budgetary allocation to agricultural sector, and the effective utilization of these allocated funds, an effective and prudent management of monetary policies with concessionary low interest rate to encourage investment in the sector all proffered as recommendations to improve the agricultural sector.
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In-Text Citation: (Ajudua et al., 2015)
To Cite this Article: Ajudua, E. I., Davis O, J. P., & Okonkwo, O. N. (2015). A Review of Monetary Policy and the Nigerian Agricultural Sector Performance. International Journal of Academic Research in Progressive Education and Development, 4(3), 72–88.
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