The results from the analysis show that along with other variables, rice importation was reported to influence the exchange rate and indirectly influenced the inflation rate. Domestic rice production, on the other hand, was found to affect GDP.
This study analyzes the impact of rice importation on the exchange rate, inflation, and GDP in Liberia. It seeks to unearth the contribution of rice importation to the economic perils facing the country, which is visible by the continuous depreciation of the country’s currency, the continuous rising of the general price level, and the slum in the total output of the country. This analysis was done using time series data spanning from 1970 to 2018. The unrestricted vector auto regressive (VAR) model was employed to estimate the exchange rate, inflation, and GDP equations used in the study. However, due to the over-parameterization of the VAR estimates, the impulse response function (IRF), forecast error variance decomposition (FEVD), and Granger causality tests were conducted to analyze the dynamic relationships amongst the variables.