Development of Supply and Demand Functions of Pakistan’s Wheat Crop
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S_{d }=
0
+
_{1}Â +
_{2}FNT +
_{3}PPT +
_{4}WAT
(1b)
0

D_{d }

0
+
D_{d }=
I_{d }
=
I_{s }
=
1 P i 
2 P w +
2 S w
1 P d +
S_{d }
_{2}GDPP +
_{3}POPP
(1c)
(1d)
(1e)
The definitions of the various variables included in the model are provided in Table1. The aforementioned model of supply and demand is a simultaneousequations recursive model occurs in Gujarati (2003, pp.764766) and Maddala (2002, p.373). A number of different specifications of this model were tried, and the final estimated model was selected on the basis of economic theory and statistical/econometric diagnostics using R^{2}, Ftest, ttest, JarqueBera (JB) Normality Test, DW test and Durban h tests (Zulfiqar, 2008).
Data and Data Sources
The model of wheat supply and demand functions specified above includes a number of dependent and explanatory variables: these include area and lagged area under wheat crop, domestic wholesale price for wheat, quantity supplied and demanded, quantity imported and import price, world average trade price, major inputs such as nutrientfertilizers, pesticides and water used, gross domestic product (GDP) and population.
Data on most of the listed variables were downloaded from the FAO’s website (www.fao.org; statistical databases). In addition, data were also obtained from the Government of Pakistan’s Agricultural Statistics of Pakistan, and the UN COMTRADE database. GDPrelated data were obtained from the IMF website. For estimation, time series data for the period 1979/80 to 2004/05 were used.
3. Empirical Results
After trying a number of different specifications of the model specified in 1 (ae), we ended up with the final estimated model given in Table2. The various equations of this model are evaluated as follows.
Wheat Acreage Equation
The estimated wheatacreage equation (A = 3695.163 + 0.48947A_{t1 }
+
24.985TR) fulfills all necessary diagnostic statistics; the explanatory
variables included are in line with economic theory and are statistically