Muhammad Zulfiqar and Anwar F. Chishti
We can remove variable TR by putting in its average value, multiplying with the estimated coefficient and adding the resultant figure to
Sd = 11040.9577 + 0.41528Pd + 2.4625FNTWT
By the same procedure, we can remove the variable FNTWT and
further condense the domestic supply equation.
Sd = 13485.77 + 0.41528Pd
Similarly, the domestic wheat demand (Dd) function can be further
condensed as follows.
Dd = 750.129 - 0.046974Pd + 136.07POP
= 16896.20 - 0.046974Pd
T h e e s t i m a t e d m o d e l l a c k s a n i m p o r t d e m a n d ( I d ) f u n c t i o n , w h i c h i s c o m p u t e d a s a n i d e n t i t y e q u a t i o n ( d i f f e r e n c e b e t w e e n D d a n d S d ) ; h e n c e :
Id = Dd - Sd
= (16896.20 - 0.046974Pd) - (13485.77 + 0.41528Pd)
= 3410.43 - 0.462254Pd
The estimated wheat import price equation and wheat import supply equation, respectively, represent the effect of the world wheat trade price (Pw) on Pakistan’s wheat import/trade price (Pi) and shows how Pakistan’s wheat import supply (Is) is affected by its various determinants.
Pi = 23.1559 + 0.91124Pw
Is =-5642.2 + 5.2191P^i - 0.96151Sd,t-1
We can merge equation (7) with equation (8a) to create equation (8b).
Is = - 5521.1413 + 4.7556Pw - 0.96151Sd,t-1
Replacing the average values of variables Sd,t-1 and Dd,t-1 and adding the intercept, we get a shortened version of the equation:
Is = - 8922.5358 + 4.7556Pw + 0.017019Sw