The Macroeconomic Determinants Of Agricultural Productivity In Uganda (1981–2023)
DOI:
https://doi.org/10.59472/x74j9850Keywords:
Agricultural Productivity, Inflation, Government Expenditure, Interest Rates, ExchangeAbstract
This study examines the macroeconomic determinants of agricultural productivity in Uganda from 1981 to 2023. Specifically, it analyzes the effects of inflation, government expenditure, interest rates, and exchange rates using an ARDL (2, 0, 1, 2, 0) model to capture both long-run and short-run dynamics. The long-run results reveal that government expenditure significantly enhances agricultural productivity, while high interest rates negatively affect output. Inflation and exchange rates show no statistically significant long-term effects. In the short run, government expenditure remains positively significant, and inflation exhibits a temporary positive effect, possibly reflecting short-term price incentives. Although interest rates are insignificant in the short run, their long-term negative effect suggests cumulative credit constraints over time. Exchange rate fluctuations are not significant in either period. Based on these findings, the study recommends increasing and efficiently allocating agricultural expenditure toward rural infrastructure and extension services, implementing financial sector reforms to reduce borrowing costs for farmers, maintaining inflation stability through prudent macroeconomic management, and adopting exchange rate risk mitigation strategies to protect agricultural incomes.
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Copyright (c) 2026 Ruth Kyomuhendo Tuhamize, Killian Arineitwe, Francis Muhire, Warren Tibesigwa, PhD
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