Muhammad Zulfiqar and Anwar F. Chishti
significant. The lagged area (At-1) positively determines the present acreage under wheat crop. The equation, however, seems to suffer from the problem of autocorrelation. As an autoregressive equation, DW is not valid and Durban h is -2.0996, which for no autocorrelation should fall in the interval 1.96.
Domestic Wheat Supply Equation
The estimated domestic wheat supply equation (Sd = -8458.219 + 2.4879Â + 0.41528Pd + 2.4625FNTWT) reflects that the area predicted (Â) in an earlier equation along with the wholesale wheat price (Pd) and nutrient fertilizers (FNTWT) used determines the domestic production/supply of wheat in Pakistan.
Domestic Wheat Demand Equation
The domestic wheat demand equation (Dd = 750.129 - 0.046974Pd +
136.07POP) indicates that, as per economic theory, the domestic demand for wheat is negatively influenced by wheat wholesale prices and positively by the size of Pakistan’s population (POP). The size of population is statistically significant at = 0.05 while the price of wheat, although it carries the correct sign, is statistically insignificant. The latter results are acceptable in a situation where wheat is a major item of daily consumption, as in Pakistan. It is worth noting that price is one of the major and statistically significant determinants of wheat supply in Pakistan, as reflected by the earlier explained
domestic wheat supply equation.
Wheat Import Price Equation
The estimated wheat import price equation (Pi = 23.1559 + 0.91124Pw) shows that Pakistan’s import price is positively determined by the world wheat price.
Wheat Import Supply Equation
The estimated wheat import supply to Pakistan (Is = -5642.2 + 5.2191P^i - 0.96151Sd,t-1 + 0.68329Dd,t-1 + 0.017019Sw) seems to have been positively affected by Pakistan’s import price (P^i; already determined in the last equation), the world supply of wheat (Sw), and previous years’ wheat consumption (Dd,t-1), and negatively by previous years’ wheat supply (Sd,t-1).