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The Determinants of Food Prices: A Case Study of Pakistan

Author

Listed:
  • Henna Ahsan

    (Pakistan Institute of Development Economics, Islamabad.)

  • Zainab Iftikhar

    (Pakistan Institute of Development Economics, Islamabad.)

  • M. Ali Kemal

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

Controlling prices is one of the major tasks for the macroeconomic policy-makers. The recent oil price hike that shifted the policy towards biofuels and some natural calamities increased food prices around the world. This paper analyses the demand- and supply-side factors that affect food prices in Pakistan. Long-run relationship is analysed using the Autoregressive Distributed Lag Model (ARDL) for the period 1970 to 2008. The result indicates that supplyside factors (subsidies and world food prices) have a significant impact on food prices , whereas demand-side factors, such as money supply, are the main cause of the increase in food prices in the short as well as the long run. The error correction is statistically significant and shows that market forces play an active role to restore the long-run equilibrium.

Suggested Citation

  • Henna Ahsan & Zainab Iftikhar & M. Ali Kemal, 2011. "The Determinants of Food Prices: A Case Study of Pakistan," PIDE-Working Papers 2011:76, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2011:76
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    File URL: https://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-76.pdf
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    References listed on IDEAS

    as
    1. Pesaran, M.H. & Shin, Y., 1995. "An Autoregressive Distributed Lag Modelling Approach to Cointegration Analysis," Cambridge Working Papers in Economics 9514, Faculty of Economics, University of Cambridge.
    2. Khan, Rana Ejaz Ali & Gill, Abid Rashid, 2007. "Impact of Supply of Money on Food and General Price Indices: A Case of Pakistan," MPRA Paper 16293, University Library of Munich, Germany.
    3. Ministry of Finance, Government of Pakistan,, 2008. "Pakistan Budget in Brief 2008," Working Papers id:1667, eSocialSciences.
    4. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    5. M. Ali Kemal, 2006. "Is Inflation in Pakistan a Monetary Phenomenon?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(2), pages 213-220.
    6. Muhammad Arshad Khan & Abdul Qayyum & Saeed Ahmed Sheikh, 2005. "Financial Development and Economic Growth: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 44(4), pages 819-837.
    7. Sajawal Khan & Muhammad Arshad Khan, 2007. "What Determines Private Investment? The Case of Pakistan," Finance Working Papers 22202, East Asian Bureau of Economic Research.
    8. Ashfaque H. Khan & Mohammad Ali Qasim, 1996. "Inflation in Pakistan Revisited," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 747-759.
    9. Nadeem Ul Haque & Abdul Qayyum, 2006. "Inflation Everywhere is a Monetary Phenomenon: An Introductory Note," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 45(2), pages 179-183.
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    Cited by:

    1. Fatima, Hira & Ahmed, Mumtaz, 2019. "Testing for Exuberance Behavior in Agricultural Commodities of Pakistan," MPRA Paper 95304, University Library of Munich, Germany.
    2. Mohsin, Asma & Zaman, Khalid, 2012. "Distributional effects of rising food prices in Pakistan: Evidence from HIES 2001–02 and 2005–06 survey," Economic Modelling, Elsevier, vol. 29(5), pages 1986-1995.
    3. Nabiha Ahsan & Aamer Amin & Jamal Hassan & Tahir Mahmood, 2020. "Effects of Inflaction on Agricultural Commodities," International Journal of Agriculture & Sustainable Development, 50sea, vol. 2(4), pages 105-111, November.

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    Keywords

    Food Prices; ARDL Approach; Pakistan;
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