A Dynamic Model of Prices and Exchange Rate Volatility on Nigerian Agricultural Trade Flows

Abstract

This paper aims to construct a dynamic regression model for estimating the Nigerian’s agricultural supply response to prices, exchange rate and prices exchange volatility . The paper utilizes data extracted fro Central Bank of Nigeria (CBN) Statistical Bulletin and NBS annual abstract of Statistics publications. The study also intends to capture structural currency policy change through a dynamic multiplier analysis that approximately considers the major characteristics and the dynamics of the associated adjustment process. The study revealed that exchange rate volatility has a negative effect on agricultural exports, while price volitality has a positive effect. Thus, the more volatility the exchange rate changes the lower the income earnings f the farmers, which subsequently also leads to a decline in output production and a reduction in export trade.