Does Fertiliser Use Respond to Policy and Price Shocks? Evidence from a Persistence Framework

Asuamah Yeboah, Samuel (2026): Does Fertiliser Use Respond to Policy and Price Shocks? Evidence from a Persistence Framework.

Abstract

This study examines whether fertiliser-use intensity in Ghana responds to policy and price shocks by modelling input behaviour as a persistence-driven process. Using annual data from 1960 to 2020, a trend-augmented AR(1) model is estimated to capture both short-run adjustments and long-run structural dynamics. The results reveal a high persistence coefficient, indicating that more than ninety per cent of past fertiliser use carries over into the current period, consistent with adjustment-cost theory and gradual learning. A significant negative deterministic trend suggests a long-run decline in fertiliser-use intensity despite recurrent subsidy interventions. Diagnostic tests confirm strong volatility persistence linked to global price shocks, exchange-rate depreciation and domestic supply constraints. The findings demonstrate that fertiliser-use behaviour adjusts slowly, with policy and price shocks producing long-lived rather than transient effects. The study contributes originality by applying a persistence framework to fertiliser use, quantifying the duration of shocks and identifying structural decline. Policy implications emphasise the need for stable multi-year fertiliser programmes, macroeconomic stabilisation and sustainability-oriented nutrient management. The results provide a dynamic understanding of fertiliser-use behaviour that can support more resilient agricultural-input policies in Ghana.

• Item Type: MPRA Paper
• Language: English
• Keywords: Persistence; Policy shocks; Price shocks; Dynamic adjustment; Agricultural input markets; AR(1) model
• Subjects: C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q12 - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q1 - Agriculture > Q18 - Agricultural Policy ; Food Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q56 - Environment and Development ; Environment and Trade ; Sustainability ; Environmental Accounts and Accounting ; Environmental Equity ; Population Growth

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