Effects of Fiscal Policy on the Exportation of Agricultural Products in Nigeria A Vector Error Correction Model Approach

摘要

The study examined the effects of fiscal policy on the agricultural products exports in Nigeria using Vector Error Correction Model (VECM) approach. Secondary data on agricultural export (AEX), total government expenditure (TGE), government expenditure on agricultural (GEA), tax on agriculture export (TAE), net food export (NFE), exchange rate (EXCH) and foreign direct investment (FDI) sourced from Central Bank of Nigeria Statistical Bulletin 2014 Edition. Trend analysis, Co-integration and VECM were used to achieve the objectives of the study. The results show that GEA was far below the 25% FAO recommendation and AEX experienced occasional recessions. The result of the unit roots showed that only TAE, NFE and EXCH were stationary at level as indicated by their significant ADF-cal at 5%. The coefficient of error correction terms was -0.20791 (p<0.000) indicating a long run relationship between agricultural export and fiscal policy variables included in the model. GEA has no instantaneous positive effect on the agricultural export; TAE had crowding effect on the current export profile and increasing FDI did not significantly turn around the export profile of the sector but EXCH did. The Government should among others strive to attain the 25% budgetary allocation to agricultural sector to encourage agricultural exportation.