FISCAL POLICY AND AGRICULTURAL SECTOR OUTPUT GROWTH IN NIGERIA

Abstract

The quest for every government to maintain a stable and steady economic growth continues to 
mount great pressure on policy makers to design and implement adequate and effective policies 
to spur the activities of the real sector.  This paper examined the impact of fiscal policy tools 
on agricultural sector output growth in Nigeria with annual data from 1980 to 2023. 
Autoregressive distributed lag (ARDL) technique was employed for the analysis and the 
empirical results confirmed that government expenditure on agricultural sector and domestic 
capital formation had positive and significant effect on agricultural output. Value added tax 
had negative and insignificant effect on agricultural sector output. Other findings showed that 
exchange rate had a negative but significant impact on agricultural output in the short run while 
in the long run exchange rate had a positive and significant impact on agricultural output. 
Inflation rate had a negative and insignificant effect on agricultural output both in the short run 
and long run periods. Based on the findings, the paper recommends policies such as increase 
in government budget on agriculture as necessary and sacrosanct to expand the activities of the 
real sectors especially that of agricultural sector in order to meet the target of sustainable 
development goal two (ZERO HUNGER) and also to curb food insecurity through direct 
domestic production.