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The Price Response of Major Crops in Pakistan: An Application of the Simultaneous Equation Model

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  • Mubarik Ali

    (Chemonics International, Economic Analysis Network project, Islamabad.)

Abstract

This paper specifies a model to simultaneously estimate the price response, assuming an interdependence among crops. The model is applied to estimate own-and cross-price elasticities of five major crops in Pakistan, viz., wheat, cotton, rice, sugarcane, and maize based on the production and expected wholesale-price data for the period 1957-86. The study found little potential to enhance overall agricultural productivity by increasing the single crop price, since either the own-price elasticities were low or, otherwise, the nagative cross-price effects on the production of other crops were high. However, a 10-percent systematic improvement in terms of trade for agriculture will increase overall agricultural productivity by about 6 percent in the long run.

Suggested Citation

  • Mubarik Ali, 1990. "The Price Response of Major Crops in Pakistan: An Application of the Simultaneous Equation Model," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 29(3 and 4), pages 305-325.
    • Handle: RePEc:pid:journl:v:29:y:1990:i:3-4:p:305-325
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    References listed on IDEAS

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    1. Marc Nerlove, 1958. "Distributed lags and Estimation of Long-Run Supply and Demand Elasticities: Theoretical Considerations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 40(2), pages 301-310.
    2. Thomas C. Pinckney, 1989. "The Multiple Effects of Procurement Price on Production and Procurement of Wheat in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 28(2), pages 95-120.
    3. Gotsch, Carl H. & Falcon, Walter P., 1975. "The Green Revolution and the Economics of Punjab Agriculture," Food Research Institute Studies, Stanford University, Food Research Institute, vol. 14(01), pages 1-20.
    4. Byerlee, Derek & Ramzan Akhtar, M. & Hobbs, Peter R., 1987. "Reconciling conflicts in sequential cropping patterns through plant breeding: The example of cotton and wheat in Pakistan's Punjab," Agricultural Systems, Elsevier, vol. 24(4), pages 291-304.
    5. Durbin, J, 1970. "Testing for Serial Correlation in Least-Squares Regression When Some of the Regressors are Lagged Dependent Variables," Econometrica, Econometric Society, vol. 38(3), pages 410-421, May.
    6. Askari, Hossein & Cummings, John Thomas, 1977. "Estimating Agricultural Supply Response with the Nerlove Model: A Survey," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 257-292, June.
    7. Narayana, N S S & Shah, M M, 1984. "Farm Supply Response in Kenya: Acreage Allocation Model," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 11(1), pages 85-105.
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    Cited by:

    1. Mubarik Ali & Abedullah, 1998. "Supply, Demand, and Policy Environment for Pulses in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 37(1), pages 35-52.
    2. Ali, Mubarik & Ahmed, Faryal & Channa, Hira & Davies, Stephen, 2016. "Pakistan’s fertilizer sector: Structure, policies, performance, and impacts," IFPRI discussion papers 1516, International Food Policy Research Institute (IFPRI).
    3. Abid A. Burki & Mushtaq A. Khan & S.M. Turab Hussain, 2006. "Prospects of Wheat and Sugar Trade between India and Pakistan : A Simple Welfare Analysis," Trade Working Papers 22249, East Asian Bureau of Economic Research.
    4. Muhammad Aamir Shahzad & Amar Razzaq & Ping Qing, 2019. "On The Wheat Price Support Policy in Pakistan," Journal of Economic Impact, Science Impact Publishers, vol. 1(3), pages 80-86.
    5. Ali, Mubarik & Ahmed, Faryal & Channa, Hira & Davies, Stephen, 2015. "The Role of Regulations in the Fertilizer Sector of Pakistan," 2015 Conference, August 9-14, 2015, Milan, Italy 211559, International Association of Agricultural Economists.
    6. Ali, Mubarik & Ahmed, Faryal & Channa, Hira & Davies, Stephen, 2015. "Equilibrium Displacement Model for Fertilizer Sector of Pakistan," 2015 Conference, August 9-14, 2015, Milan, Italy 210943, International Association of Agricultural Economists.
    7. Abedullah & Mubarak Ali, 2001. "Wheat Self-sufficiency in Different Policy Scenarios and Their Likely Impacts on Producers, Consumers, and the Public Exchequer," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(3), pages 203-223.
    8. Muhammad Aamir, Shahzad, 2017. "Policy Reforms & Analysis of Wheat Procurement System in Punjab, Pakistan," MPRA Paper 81562, University Library of Munich, Germany, revised 01 Mar 2017.

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