Tahir Mukhtar

Cointegration and Error-Correction Modelling of Wheat Consumption in Pakistan

Purpose - The purpose of this paper is to estimate the short and the long run wheat demand elasticities in Pakistan. Design/methodology/approach - Using cointegration and vector error correction model (VECM) techniques, the main objective of the study has been achieved. Findings - The estimated long run and the short run elasticities suggest that income is the most significant determinant of wheat consumption in the long run while price of wheat is the major affecting factor of wheat consumption only in the short run. Practical implications - The estimated demand elasticites may be used for framing any future food security policy in Pakistan. The less elastic nature of wheat demand both in the short and the long run suggests that under the likely Doha Round agricultural trade liberalization, wheat price rise will harm the poor consumers. Originality/value - Wheat demand elasticities are estimated within the framework of cointegration and VECM to differentiate short run and long run elasticities in Pakistan.

The Current Account Deficit Sustainability: An Empirical Investigation for Pakistan

The existence of large and persistent current account deficit is always viewed with great concerns, as it usually leads an economy to a state of insolvency due to building up excessive net foreign debt. As the current account deficit is a persistent feature of Pakistan’s economy, therefore, it becomes essential to empirically investigate, whether this deficit is sustainable or not. To this end, the present study has applied two alternative approaches, namely, the intertemporal approach to the current account and the intertemporal solvency approach, in order to get more convincing evidence on the sustainability issue in Pakistan using the time series data over the period 1960 to 2012. From the perspective of both the approaches, Pakistan’s current account deficit is on a sustainable path and the macroeconomic policies of the country remained effective in securing it from any external sector crisis.