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An Empirical Analysis of the Prices of Selected Food Items Across Three Political administrations in Pakistan
Nehal Ahmad Khan, Anwar Shah
Published:Winter 2022
This study compares the prices of selected food items across three political administrations in Pakistan. We have taken monthly data from July 2008 to October 2021 of the
prices of selected food items from the Pakistan Bureau of Statistics, the Ministry of Finance
(Pakistan)’s Pakistan Economic Survey, and Index Mundi. Thirteen food items were selected: Wheat, Basmati Rice, Basmati Super Rice, Basmati Broken Rice, Sindh/Punjab Rice,
Tinned Vegetable Ghee, Loose Vegetable Ghee, Whole Masoor Pulse, Washed Masoor
Pulse, Washed Mong Pulse, Washed Mash Pulse, Gram Pulse and Refined Sugar. We theorize that an increase in prices will be independent of changes in political administration, as
prices are determined purely based on economic factors in the market. We provide graphical and regression analysis, with our study pointing to a consecutive rise in the absolute
price of selected food items across all three administrations. Increasing real prices of selected
food items are specific to each administration.
KEYWORDS:
Political administration,
selected food items,
nominal prices,
real prices,
food inflation,
ARDL model.
JEL:
Q11,
L66,
N70.
Examining the Trade Determinants and Potential of Pakistan: A Gravity Model Analysis
Suadat Hussain Wani, M. Afzal Mir
Published:Winter 2022
This study aims at identifying the main determinants of the annual trade flows of
Pakistan with its top trade partners, including those with which the country has signed
trade agreements. Given the present economic conditions of the country, it is important to
identify the main determinants of trade so that the country can benefit from trade openness
around the world. In addition to identifying trade determinants, the impact of adherence to
a particular trade agreement was also examined. The results indicate that FTA signed by
Pakistan with China and other trade partners has created trade opportunities for
participating countries, highlighting the importance of trade liberalization for the long-run
development of the country. Besides, the trade potential of Pakistan with selected trade
partners has also been estimated.
KEYWORDS:
Pakistan,
gravity model,
panel data,
total trade,
trade potential.
JEL:
C23,
P45,
F10.
Unlocking Markets: Assessing Pakistan’s Trade Potential with Gulf Cooperation Council Members
Wajid Islam, Junaid Ahmed, Amjad Masood
Published:Winter 2022
This study examines the trade potential of Pakistan with the countries of the
Gulf Cooperation Council (GCC). Trade potential is estimated using the RCA (Revealed
Comparative Advantage) index technique, utilizing HS-8 tariff line level data from 2007
to 2021. Our findings identify 102 products at the tariff line where Pakistan enjoys a
comparative advantage. These products span various sectors, including copper, iron,
steel, minerals, wood, pharmaceutical, paper, tobacco, sugar, and plastic. Furthermore,
the paper discusses the trade hindering effect of factors such as the absence of effective
trade agreements, shortage and high energy prices, and other high input costs.
KEYWORDS:
Trade potential,
Pakistan,
Gulf Cooperation Council,
HS-8,
revealed comparative advantage.
JEL:
F10,
C61.
Differential Impact of Taxation on Food Items
Iffat Ara and Qazi Masood Ahmed
Published:Jan - June 2022
In Pakistan, essential food items are exempted from indirect taxes to avoid any
subsequent increase in their prices, with the goal of protecting the poor from a regressive
tax burden. Taxes on inputs such as on fuel and energy, however, are transferred to
consumer prices and, due to cascading effects, can exert a burden on households. This
study investigates the incidence of indirect taxes on essential and nonessential food
items across households in Pakistan. To do so, we follow an input‒output multiplier-
based approach that allows the measurement of the cascading effect of taxes. It employs
the latest available edition of the Household Integrated Economic Survey (HIES) 2018-
19 in order to observe household food expenditures. Our analysis establishes that there
is an effective tax even on items that are ostensibly tax-exempt, implying that households
pay taxes indirectly even on those items. The incidence of these indirect taxes on essential
food items is regressive across all household deciles and the incidence of indirect taxes
on nonessential items is progressive at high expenditure deciles but proportional in the
lower-ranking expenditure deciles.
KEYWORDS:
Tax Incidence,
Distribution of Tax Burden,
Tax Burden,
Indirect Taxes,
Pattern of Incidence,
Pakistan.
JEL:
E31,
H22,
H23.
A Spatial Agglomeration Analysis of Firm Productivity: A Case of the Textile Sector of Pakistan
Muhammad Zeeshan Younas
Published:Jan - June 2022
The prime objective of this study is to examine how agglomeration affects the
productivity of firms by location. Using different spatial econometrics on geo-referenced
data of textile manufacturers in Pakistan, the study confirmed the presence of spatial
autocorrelation in firm productivity. Results show that highly productive textile firms
appear to be clustered in the regions of Lahore and Faisalabad, while low productivity
textile firms appear to be clustered in Karachi and the Federal areas of Pakistan.
Although the spread of clusters varies a bit with the use of different weight matrices,
similar hotspots and cold spot patterns are observable. Furthermore, spatial error and
spatial lag models find that younger textile firms tend to be more productive than older
ones and firm size, exports, quality assurance certifications, and R&D spending are the
key spatial correlates of textile firm productivity.
KEYWORDS:
Firm Productivity,
Agglomeration,
Spatial Analysis,
Textile,
Pakistan.
JEL:
D22,
D24,
L25.
Forecasting the GDP Growth in Pakistan: The Role of Consumer Confidence
Syed Ateeb Akhter Shah, Fatima Kaneez and Arshad Riffat
Published:Jan - June 2022
This paper investigates whether consumer confidence improves the prediction
of GDP growth over what are popularly construed as fundamental economic variables.
We use monthly data concerning Consumer Confidence Index (CCI) and its sub-indices
to forecast GDP growth for Pakistan. Employing a set of univariate and multivariate
models and comparing their forecasting performance against the Naïve mean model, we
find that adding the consumer sentiments with fundamental economic variables
improves the forecast of GDP growth. Vector autoregressive model with current
economic conditions index and economic fundamentals, we find, performs the best. The
results have potential policy implications in terms of tackling unemployment and
inflation, for economic growth stimulation.
KEYWORDS:
Consumer Confidence Index,
Forecasting,
GDP growth,
AR,
ARMA,
VAR.
JEL:
C53,
E17,
C32,
D12.
Pre and Post Evaluation of Pakistan-Sri Lanka Free Trade Agreement
Mazhar Hussain and Syed Zulfiqar Ali Shah
Published:Jan - June 2022
The objective of this article is to evaluate the impact of Pakistan-Sri Lanka Free
Trade Agreement (FTA) on Pakistan's and Sri Lanka's macroeconomic structures. The
FTA is operational since June 2005. For this purpose, the Computable General
Equilibrium (CGE) Model has been used and simulations have been conducted by using
the Global Trade Analysis Project (GTAP) model, which measures the effect of FTA on
Pakistan. The GTAP is a General Equilibrium modeling structure of the multiple
economies. The finding of this study reflects that Pakistan has positive impact on real
GDP, trade and welfare, while Sri Lanka has negative impact on the same factors.
Moreover, the results of this study are coherent with the international trade theories.
This research assists the trade policy makers to adopt appropriate policies for future
FTAs with South Asian economies to obtain more gains for Pakistan.
KEYWORDS:
Pakistan,
Sri Lanka,
FTA,
General Equilibrium,
GTAP.
JEL:
F15.
Cost Stickiness, Firm’s Dividend Payouts, and Family Ownership
Ali Amin, Rizwan Ali and Ramiz ur Rehman
Published:Jan - June 2022
Our study enriches the growing literature on cost stickiness in the context of an
emerging economy. The study examines the relationship between cost stickiness and
dividend payout behavior in Pakistan, and the possibility of their being a moderating role of
family ownership. Empirically, we employed 4,567 firm-year observations of non-financial
firms listed on the Pakistan Stock Exchange, over the period 2006-2021, and used ordinary
least squares regression method to test our hypotheses. Additionally, we used generalized
method of moments techniques (GMM) to test the robustness of our results. Using the lens
of agency theory, we find that cost stickiness is associated with higher dividend payouts.
Further, family ownership moderates the relationship between cost stickiness and dividend
payout. Overall, our results support cost stickiness in our sample of firms and a positive
correlation of family ownership with dividend payout.
KEYWORDS:
Cost stickiness,
dividend payout,
agency theory.
JEL:
G32.
The Impact of Economic Policy Uncertainty on Consumer Confidence in Pakistan
Syed Ateeb Akhter Shah, Fatima Kaneez and Riffat Arshad
Published:July - Dec 2021
This study examines the impact of Economic Policy Uncertainty (EPU) on the consumer
confidence index (CCI) in Pakistan. Using a sample from the start of 2012 up to February
2020, a vector error-correction model is used to gauge the impact of EPU on CCI. Our
results show that a shock to EPU in Pakistan affects CCI negatively and significantly.
The shock persists for a span of more than 20 forecast horizons, informing economic
policy makers in Pakistan that sudden changes in the stance without proper
communication can deteriorate consumer confidence. This is important as consumer
confidence in Pakistan accounts for not only the current economic situation, but expected
changes in key macroeconomic variables which is usually a key consideration when
forward-looking policies are devised. Our results remain robust to alternate Choleski
specifications and lag lengths in the model.
KEYWORDS:
Economic Policy,
Pakistan,
uncertainty,
consumer confidence,
VECM,
IRFs,
VDCs.
JEL:
E32,
H00,
H31.
Remittances and Output Volatility: The Role of Financial Development
Aisha Tauqir and Muhammad Tariq Majeed
Published:July - Dec 2021
This paper examines the impact of remittances on output volatility through the channel
of financial development using data for 158 countries from 1971 to 2017. We estimate the
role of financial development by looking at multiple features of financial institutions,
such as depth, access and efficiency. We used multiple indicators as a proxy of financial
development in the remittance-output volatility nexus and employed System
Generalized Method of Moments (GMM) and Fixed Effects Instrumental Variable (FEIV) models. Our findings are robust across specifications. We find a significant positive
impact of all indicators of financial development on the remittance-output volatility
relationship. The findings suggest that multifaceted financial development is needed for
the effective management of output volatility through remittance inflows.
KEYWORDS:
Output volatility,
remittances,
financial developmen,
remittance-output volatility nexus.
JEL:
C33,
F24.