Supply Response of Wheat in Bangladesh: an Application of Partial Adjustment Model
S.M. Fakhrul Islam,
M. Jahangir Kabir
The present study was designed to determine the wheat supply response to selected factors and to analyze the short run and long run supply responses of wheat in Bangladesh. Time series data from 1972-73 to 1998-99 have been used in the analysis. Econometric and statistical techniques were used to estimate the supply response of wheat at the national level. The price responses of wheat supply under the partial adjustment (PA) model were 0.67 in the short run and in the long run this was 1.06 and was statistically significant. Similarly, the response of wheat supply to lagged irrigation was relatively higher, which was 1.11 in the short run and in the long run it was 1.76. Besides, this was highly significant at 1 per cent level. The adjustment coefficient was 0.63 in the wheat sector during the period. The results indicate that the implementation of a farm price support policy could be used to manipulate wheat supply in Bangladesh. If public expenditures were geared properly to build irrigation infrastructure, it would give positive impacts on wheat supply in the country. If the government would follow a price stabilization policy, it would reduce price risk and would produce a positive impact on wheat supply situation in Bangladesh.
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