YIELD RESPONSE IN PAKISTAN AGRICULTURE: A COINTEGRATION APPROACH

We seek to quantify and evaluate the supply (yield) response of wheat and cotton in Pakistan using cointegration analysis and annual data for 1960-96. The results reveal that wheat supply is significantly influenced by the prices of wheat, cotton, and fertilizer, the percentage area under high yielding wheat varieties, and the rabi season (winter) water availability. The cotton supply is found to be significantly influenced by the real cotton price, the real fertilizer price, and in the irrigated area. The wheat supply was found to be inelastic both in the short- and long-run. However, cotton supply was elastic in the long-run.