Linkages of macroeconomic indicators and agricultural variables in Malaysia

A study using econometric approach to assess the dynamic interactions between macroeconomic indicators and agricultural income in Malaysia was conducted.It was found that the changes in Malaysia’s money supply or credit availability and the interest rates had significant relationships to both our agricultural income and exports. In other words, an expansionary money supply (better credit availability) led to increasing income and exports for agriculture sector, while increasing interest rates resulted in deterioration of income and export. Thus Malaysia’s monetary policy, through its impact on interest rates, exchange rates and the supply of money in the economy, should be managed properly to avoid the unintended effects that can hinder the development and competitiveness of Malaysian agriculture.