Ricardo Guzman*, Anastasiia Antonova**

Séminaires internes
phd seminar

Ricardo Guzman*, Anastasiia Antonova**

Industrial policy and input market access: Evidence from Nigerian fertiliser*
Endogenous uncertainty and aggregate demand**
Co-écrit avec
Mykhailo Matvieiev, Céline Poilly**

MEGA Salle Carine Nourry

MEGA - Salle Carine Nourry

Maison de l'économie et de la gestion d'Aix
424 chemin du viaduc
13080 Aix-en-Provence

Mardi 16 janvier 2024| 11:00 - 12:30

Lucie Giorgi : lucie.giorgi[at]univ-amu.fr
Ricardo Guzman : ricardo.guzman[at]univ-amu.fr
Natalia Labrador : natalia.labrador-bernate[at]univ-amu.fr
Nathan Vieira : nathan.vieira[at]univ-amu.fr


*Many economies use industrial policy to nurture sectors that produce inputs critical to economic development. While there are theoretical reasons that justify such state interventions, there is limited direct evidence on whether industrial policy in input markets could effectively induce productivity gains for firms that purchase these inputs. In this paper, I make progress on this front by evaluating an import substitution policy in Nigeria that sought to expand domestic production of inorganic fertiliser, a modern input to agriculture. In particular, I focus on assessing two components of the policy: the construction of domestic fertiliser manufacturing plants and a ban on imports of fertilisers. Combining household surveys and geospatial data on plant locations, I estimate the effects of policy-induced changes in access to fertiliser on input expenditures, adoption rates, and crop yields. To deliver credible estimates, I take advantage of the fact that farm-households were differentially exposed to the policy based on their distance to sources of fertiliser and the specific nutritional requirements of the crops they produce. I find that farms closer to sources of fertiliser exhibit higher rates of adoption on both the extensive and intensive margin, as well as greater crop yields. Preliminary evidence also suggests that the observed effect works through retail prices.

**This paper examines the role of time-varying information frictions in amplifying aggregate demand. We enhance the standard New-Keynesian model by incorporating an imperfect information setup, where households acquire knowledge from economic activities. During recessions, the availability of information diminishes, heightening uncertainty and prompting an increase in precautionary saving. This surge in precautionary saving contributes to a further decline in economic activity, exacerbating uncertainty. The strong enough endogenous uncertainty channel reverses the impact of productivity shocks on the output gap. Additionally, this channel may result in the crowding-in of private consumption by the government spending policies. These theoretical effects hold in a model calibrated to the U.S.