Climate Change and Macro Prices in Nigeria: A Nonlinear Analysis

Abstract

The study analyses the impacts of climate change on macro prices (foodprices, interest rate, and exchange rate). Secondary data from 1960–2019are used, and the nonlinear autoregressive distributed lag method is employedaccordingly. The results reveal that there is a long-run relationshipamong the variables employed. In addition, asymmetry only existsbetween food prices and exchange rate in the short run while it only subsistsfor all macro prices, except interest rate as a dependent variable, inthe long run. Also, the relative effects of climate change on macro pricesgrade food prices with the highest effect. In fact, the continual need for climatepolicies in both financial and real sectors to douse the effect of climatechange on macro prices cannot be overemphasised. Therefore, this studyrecommends that the Nigerian government and policymakers should ratifyand pursue policy initiatives and strategies based on both negative andpositive changes in macro prices.