Climate Change and Macro Prices in Nigeria: A Nonlinear Analysis

Abstract

The study analyses the impacts of climate change on macro prices (food
prices, interest rate, and exchange rate). Secondary data from 1960–2019
are used, and the nonlinear autoregressive distributed lag method is employed
accordingly. The results reveal that there is a long-run relationship
among the variables employed. In addition, asymmetry only exists
between food prices and exchange rate in the short run while it only subsists
for all macro prices, except interest rate as a dependent variable, in
the long run. Also, the relative effects of climate change on macro prices
grade food prices with the highest effect. In fact, the continual need for climate
policies in both financial and real sectors to douse the effect of climate
change on macro prices cannot be overemphasised. Therefore, this study
recommends that the Nigerian government and policymakers should ratify
and pursue policy initiatives and strategies based on both negative and
positive changes in macro prices.