Linkages amongst Government Spending, Stock Market Development and Output in Nigeria Agriculture

This study explored the nexus amongst government agricultural spending and its inherent volatility level, total capital employed and turnover of the agricultural sector of the stock market and agricultural output in Nigeria. Time series data from 1978-2008 were employed. Data were analyzed using square of mean-adjusted relative change volatility estimation method, co-integration and error correction model and two-stage-least squares regression technique. There is the existence of a long-run relationship amongst government agricultural spending, total capital employed and turnover of the agricultural sector of the stock market and agricultural output. Government agricultural spending is influenced by its lag (0.42) and agricultural output (-1.94). Total capital employed in the agricultural sector of the stock market is influenced by government agricultural spending (0.15). Total turnover of the agricultural sector of the stock market is influenced by the total capital employed in the sector and the volatility level in government agricultural spending (-0.03). Agricultural output is influenced by government agricultural spending (0.09) and total turnover of the agricultural sector of the stock market (0.23). Government agricultural spending stimulates the development of the agricultural sector of the stock market, while its volatility is an impediment. The agricultural sector of the stock market is an effective window policy makers can exploit to increase agricultural output.