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Estimation of Farmer's Response to Price Dynamics in Partial Adjusted Autoregressive and Distributive Lagged Models: An Application to Rubber Production in Nigeria

Author

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  • Abiola, M. O.
  • Ada-Okungbowa, C. I.
Abstract
The study examined the response of rubber output to price dynamics in Nigeria. Secondary data of rubber output in hectares and price for a period of forty four years (1960-2004) from Central Bank of Nigeria and National Bureau of statistics were used for the study. Inferential statistics; partial adjusted autoregressive and distributive lagged models of regression were applied to the secondary data obtained. The result of partial adjusted autoregressive model indicates that the one period lagged producer price had a short run elasticity of 0.043 and it is significantly different from zero with observed long run elasticity of 6.7169. The adjusted lagged coefficient had increasing effect on hectarage of rubber in the period under review. A stationary situation was observed given that DFr (tau) calculated (3.818) was greater than DF r (tau) statistics of -2.620. Equilibrium exists but the rate of adjustment from both directions is slow. The distributive lagged model short run elasticity of 0.003 and 0.007 for the two lagged periods indicates that previous prices had increasing effect on rubber output. The study concludes that price policies are effective tools for obtaining the desire level of output in rubber production in Nigeria.

Suggested Citation

  • Abiola, M. O. & Ada-Okungbowa, C. I., 2012. "Estimation of Farmer's Response to Price Dynamics in Partial Adjusted Autoregressive and Distributive Lagged Models: An Application to Rubber Production in Nigeria," Nigerian Journal of Agricultural Economics, Nigerian Journal of Agricultural Economics, vol. 3(1).
    • Handle: RePEc:ags:naaenj:267817
    DOI: 10.22004/ag.econ.267817
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    References listed on IDEAS

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    2. Mordecai Ezekiel, 1938. "The Cobweb Theorem," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 52(2), pages 255-280.
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