Template-Type: ReDIF-Article 1.0 Author-Name: Durr-e-Nayab Author-X-Name-First: Durr-e- Author-X-Name-Last: Nayab Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Demographic Dividend or Demographic Threat in Pakistan? Abstract: Population growth and size have remained the focus of debate for centuries but the recent demographic transition in developing countries has made social scientists take note of the changing age structure of the population as well. As a result of declining population growth and consequent changes in age structure, the proportion of working-age population is increasing in most developing countries. An associated decline in the dependent age population offers a window of opportunity, referred to as the ‘demographic dividend’. Pakistan is also going through the demographic transition, and is experiencing a once-in-a-lifetime demographic dividend as the working-age population bulges and the dependency ratio declines. This paper looks into the demographic dividend being offered to Pakistan and its implications for the country, mainly through three mechanisms: labour supply, savings, and human capital. For economic benefits to materialise, there is a need for policies dealing with education, public health, and those that promote labour market flexibility and provide incentives for investment and savings. On the contrary, if appropriate policies are not formulated, the demographic dividend might, in fact, be a cost, leading to unemployment and an unbearable strain on education, health, and old age security. Classification-JEL: J10, J11, J21 Keywords: Demographic Dividend, Age-structure, Demographic Transition, Pakistan Journal: The Pakistan Development Review Pages: 1-26 Volume: 47 Issue: 1 Year: 2008 File-URL: http://www.pide.org.pk/pdf/PDR/2008/Volume1/1-26.pdf File-Format: Application/pdf Handle: RePEc:pid:journl:v:47:y:2008:i:1:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: G. M. Arif Author-X-Name-First: G. M. Author-X-Name-Last: Arif Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Nusrat Chaudhry Author-X-Name-First: Nusrat Author-X-Name-Last: Chaudhry Author-Workplace-Name: Khushhali Bank, Islamabad. Title: Demographic Transition and Youth Employment in Pakistan Abstract: There is convincing evidence that Pakistan has entered the demographic bonus phase; child dependency is declining and youth share in the total population is rising. This paper has examined youth employment in the context of demographic transition evidenced since the early 1990s. Changes in the level of educational attainment have also been analysed. The study has used the data from Pakistan Demographic Surveys and Labour Force Surveys carried out between 1990 and 2005. Findings of the study show that the benefits of demographic transition in terms of rising share of youth in the total population has partially been translated through development of their human capital and productive absorption in the local labour market. While the pace of human capital formation seems to be satisfactory in urban Pakistan, it is dismal in rural areas, particularly for females. High levels of both female inactivity across the education categories and unemployment for males as well as females urge a strong youth employment policy in Pakistan to reap the benefits of the ongoing demographic transition. Youth are a source of development, and a high priority may be placed on preparing them with the skills needed for their adjustment in the labour market. Classification-JEL: J13, J21 Keywords: Demographic Transition, Youth, Employment, Pakistan Journal: The Pakistan Development Review Pages: 27-70 Volume: 47 Issue: 1 Year: 2008 File-URL: http://www.pide.org.pk/pdf/PDR/2008/Volume1/27-70.pdf File-Format: Application/pdf Handle: RePEc:pid:journl:v:47:y:2008:i:1:p:27-70 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Dorosh Author-X-Name-First: Paul Author-X-Name-Last: Dorosh Author-Workplace-Name: World Bank, Washington, DC. Author-Name: Abdul Salam Author-X-Name-First: Abdul Author-X-Name-Last: Salam Author-Workplace-Name: Federal Urdu University of Arts, Science and Technology, Islamabad. Title: Wheat Markets and Price Stabilisation in Pakistan: An Analysis of Policy Options Abstract: This article provides a quantitative analysis of the effects of Pakistan government domestic wheat procurement, sales, and trade policies on wheat supply, demand, prices, and overall inflation. Analysis of price multipliers indicates that increases in wheat procurement prices (one means of promoting domestic procurement) have relatively small effects on the overall consumer price index. Partial equilibrium analysis of wheat markets suggests that fluctuations in production, rather than market manipulation, are plausible explanations for price increases in recent years. Comparisons of domestic and international prices suggest that promoting private sector imports is one alternative for increasing supply and stabilising market prices, particularly in years of production shortfalls. Overall, this paper concludes that market forces play a dominant role in price determination in Pakistan, and that policies that promote the private sector wheat trade can both increase price stability and reduce fiscal costs. Classification-JEL: Q11, Q18 Keywords: Food Policy, Food Price Stabilisation, Agricultural Policy, Food Price Inflation Journal: The Pakistan Development Review Pages: 71-87 Volume: 47 Issue: 1 Year: 2008 File-URL: http://www.pide.org.pk/pdf/PDR/2008/Volume1/71-87.pdf File-Format: Application/pdf Handle: RePEc:pid:journl:v:47:y:2008:i:1:p:71-87 Template-Type: ReDIF-Article 1.0 Author-Name: Akhand Akhtar Hossain Author-X-Name-First: Akhand Akhtar Author-X-Name-Last: Hossain Author-Workplace-Name: University of Newcastle, Australia. Title: Rural Labour Market Developments, Agricultural Productivity, and Real Wages in Bangladesh, 1950–2006 Abstract: This paper provides an overview of recent developments in rural labour markets in Bangladesh and also examines the trends and movements of agricultural productivity and real wages with annual data for the period 1950–2006. The paper links the movements of agricultural real wages to macroeconomic developments in general and agricultural development in particular. As part of empirical investigation, the paper develops a simple model of agricultural real wages that depend on agricultural productivity. In order to examine the long-run relationship between agricultural productivity and real wages, the paper applies the Autoregressive Distributed Lag Bounds testing approach. Empirical results suggest that there exists a long-run relationship between agricultural productivity and real wages, and that agricultural productivity can be treated as a ‘long-run forcing variable’ in explaining agricultural real wages. In the dynamic specification of real wages, the coefficient on oneperiod lagged error-correction term bears the expected negative sign and is significant. The forecasting ability of the error correction model is satisfactory with respect to the level or the percentage change of real wages. The overall results are consistent with the findings of earlier studies that agricultural productivity is a key determinant of real wages in Bangladesh. Classification-JEL: C32, J43, O13 Keywords: Rural Labour Markets, Agricultural Wages, Agricultural Productivity, ARDL Bounds Testing Approach, Bangladesh Journal: The Pakistan Development Review Pages: 89-114 Volume: 47 Issue: 1 Year: 2008 File-URL: http://www.pide.org.pk/pdf/PDR/2008/Volume1/89-114.pdf File-Format: Application/pdf Handle: RePEc:pid:journl:v:47:y:2008:i:1:p:89-114 Template-Type: ReDIF-Article 1.0 Author-Name: Zahid Hasnain Author-X-Name-First: Zahid Author-X-Name-Last: Hasnain Author-Workplace-Name: The World Bank, Pakistan. Title: The Politics of Service Delivery in Pakistan: Political Parties and the Incentives for Patronage, 1988-1999 Abstract: This paper examines the impact of the political party structure on the incentives for politicians to focus on patronage versus service delivery improvements in Pakistan. By analysing inter-provincial variations in the quality of service delivery in Pakistan, the paper argues that the more fragmented, factionalised, and polarised the party systems, the greater are the incentives for patronage, weakening service delivery improvements. Fragmentation and factionalism both exacerbate the information problems that voters have in assigning credit (blame) for service delivery improvements (deterioration), thereby creating the incentives for politicians to focus on targeted benefits. Polarisation, particularly ethnic polarisation, reduces the ability of groups to agree on the provision of public goods, again causing politicians to favour the delivery of targeted benefits. Classification-JEL: D72, H41, I00 Keywords: Public Goods, Models of Political Processes: Rent Seeking, Elections, Legislatures, and Voting Behaviour, Health, Education, and Welfare: General Journal: The Pakistan Development Review Pages: 129-151 Volume: 47 Issue: 2 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue2-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:2:p:129-151 Template-Type: ReDIF-Article 1.0 Author-Name: Haadia Arshad Author-X-Name-First: Haadia Author-X-Name-Last: Arshad Author-Workplace-Name: Quaid-i-Azam University, Islamabad. Author-Name: Muhammad Idrees Author-X-Name-First: Muhammad Author-X-Name-Last: Idrees Author-Workplace-Name: Quaid-i-Azam University, Islamabad. Title: Trends in Polarisation in Pakistan Abstract: This study analyses the trends in polarisation in Pakistan, in its rural and urban segments and its provinces, at the micro level during the period 1992-93 to 2001-02. Estimations are made by using the Bossert-Schworm measure (2006). The study finds fluctuating trends. In general, polarisation declined in all regions of Pakistan during 1996-97 and 2001-02, while 1998-99 is the period of maximum polarisation. Incorporating the household size reduces the extent of polarisation, implying that ignoring the household size overestimates polarisation. The comparison of trends in polarisation and income inequality shows that generally the trends in inequality and polarisation are similar. Classification-JEL: D6, I3, D63, D31 Keywords: Polarisation, Income Inequality, Poverty, Welfare Journal: The Pakistan Development Review Pages: 153-167 Volume: 47 Issue: 2 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue2-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:2:p:153-167 Template-Type: ReDIF-Article 1.0 Author-Name: Rana Ejaz Ali Khan Author-X-Name-First: Rana Ejaz Author-X-Name-Last: Ali Khan Author-Workplace-Name: The Islamia University of Bahawalpur. Title: Gender Analysis of Children’s Activities in Pakistan Abstract: This paper estimates gender differences in children’s time allocation among four ordered options. It analyses the sample of boys and girls separately through a series of probit models using primary data. We compare the socio-economic determinants of boys’ and girls’ activities. The results suggest that boys are more likely to go to school as compared to girls with the increase in their age. The provision of schooling as an instrument to decrease child labour and home-care would affect boys more than girls. To make the adults literate (five years of education) only is not enough to eliminate the gender gap in schooling; a greater number of years of adult education is necessary. The female adult education may be devised to eliminate gender discrimination in child schooling. In the larger households, girls drop out of school and are absorbed in the labour market earlier than boys. The results further suggested that the use of resources is significantly different for boys’ and girls’ welfare. Thus, we conclude that girls can be a better target for increase in the welfare of all children in Pakistan. Classification-JEL: J160, J210, J820, O150, J240, J220 Keywords: Economics of Gender, Education, Child Labour, Poverty, Human Capital Formation, Time Allocation Journal: The Pakistan Development Review Pages: 169-195 Volume: 47 Issue: 2 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue2-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:2:p:169-195 Template-Type: ReDIF-Article 1.0 Author-Name: Sajjad Akhtar Author-X-Name-First: Sajjad Author-X-Name-Last: Akhtar Author-Workplace-Name: Former Director and Research Officer, respectively at the Centre for Research on Poverty Reduction and Income Distribution (CRPRID), Islamabad. Title: Occupational Status and Earnings Inequality: Evidence from PIHS 2001-02 and PSLM 2004-05 Abstract: Wage/earnings inequalities are one source of overall inequality in a country. The former inequalities in turn are closely linked with differential occupational status either defined in a contractual or productive/skill sense. Using the Pakistan Standard Classification of Occupations[PSCO (1994)], this paper estimates Gini coefficients for three types (all types, employee, selfemployed) of individuals/earners by occupational status from the Pakistan Integrated Household Survey (PIHS) 2001-02 and Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05. Long-term trends in earnings inequality from 1992-93 to 2004-05 are documented with the benchmark estimates in the Ahmad (2002) study, while the short-term trends are measured from 2001-02 to 2004-05 for self-employed and paid employee. The longas well as the short-term trends indicate rising earnings disparities within each occupational category. Over the longer period, these disparities have risen in the range of 50 to 100 percent. Shifts across occupation and across employment status indicate doubling of the share of Shop and Market Sales and Services Workers and the transition towards becoming self-employed. A few tentative explanations for the observed increasing occupational inequalities at the individual level are: (a) Availability of credit and improved efficiency of capital market may have relaxed capital constraints of former employees and enabled them to transit as selfemployed. Right-sizing and down-sizing in public organisations may also have pushed the previous employees into utilising the ‘golden handshake’ packages towards self-employment. Assuming that returns on capital (internal or borrowed) are higher and financial contracts are more lucrative than wage contracts, the situation can lead to wider disparities. (b) At the paid employee level, the fall in the share of workers in elementary occupations improved the wage contracts of those still remaining in this occupation, and thereby increased the income/earnings inequality within this category. (c) Premium on skills, education, experience, and talent, in spite of the entry of a large number of individuals in the Service, Shop and Market Sales Workers category, has widened the inequalities within this category. Classification-JEL: D310, E240 Keywords: Earnings Inequality, Occupational Status, Occupational Inequality Journal: The Pakistan Development Review Pages: 197-213 Volume: 47 Issue: 2 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue2-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:2:p:197-213 Template-Type: ReDIF-Article 1.0 Author-Name: Afia Malik Author-X-Name-First: Afia Author-X-Name-Last: Malik Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Crude Oil Price, Monetary Policy and Output: The Case of Pakistan Abstract: This paper has analysed the impact of rising crude oil prices on output. Crude oil prices and real output are found to be strongly related, and this relationship has a bellshape. That is, when crude oil prices are below the critical level (i.e., 22 $s/bbl), the relationship between crude oil prices and real output is positive; whereas when the crude oil price rises and exceeds that critical level the relationship becomes negative. Moreover, high debt-GDP ratio, high deficit spending, and high real effective exchange rate would have a negative impact on output. While the existence of foreign exchange reserves and capital investment would cause output to rise. Classification-JEL: E52, Q43 Keywords: Oil Prices, Output, Pakistan, Macroeconomy Journal: The Pakistan Development Review Pages: 425-436 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:425-436 Template-Type: ReDIF-Article 1.0 Author-Name: Muhammad Arshad Khan Author-X-Name-First: Muhammad Author-X-Name-Last: Arshad Khan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Usman Ahmad Author-X-Name-First: Usman Author-X-Name-Last: Ahmad Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Energy Demand in Pakistan: A Disaggregate Analysis Abstract: This study examines the demand for energy at disaggregate level (gas, electricity and coal) for Pakistan over the period 1972-2007. Over main results suggest that electricity and coal consumption responds positively to changes in real income per capita and negatively to changes in domestic price level. The gas consumption responds negatively to real income and price changes in the short-run, however, in the long-run real income exerts positive effect on gas consumption, while domestic price remains insignificant. Furthermore, in the short-run the average elasticities of price and real income for gas consumption (in absolute terms) are greater than that of electricity and coal consumption. The differences in elasticities of each component of energy have significant policy implications for income and revenue generation. Classification-JEL: Q41, Q42, C50 Keywords: Energy Demand, Disaggregate Analysis, Cointegration Journal: The Pakistan Development Review Pages: 437-455 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:437-455 Template-Type: ReDIF-Article 1.0 Author-Name: Muhammad Nasir Author-X-Name-First: Muhammad Author-X-Name-Last: Nasir Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Muhammad Salman Tariq Author-X-Name-First: Muhammad Salman Author-X-Name-Last: Tariq Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Ankasha Arif Author-X-Name-First: Ankasha Author-X-Name-Last: Arif Author-Workplace-Name: Department of Economics, Quaid-i-Azam university, Islamabad. Title: Residential Demand for Electricity in Pakistan. Abstract: For about a year now, Pakistan is facing the worst energy crisis of her history. If on one hand, the increase in the oil prices at the world level is severely affecting the common masses, on the other hand, the shortage of electricity is creating havoc in the country. Beside others, one important reason that is advocated for this shortage is the rise in electricity demand due to increase in production as well as rise in household income. Furthermore, it is believed that increasing the unit price of electricity will reduce the electricity demand. That is why the unit prices of electricity vary with different range of unit usage. This motivates us to calculate price elasticity as well. Hence, using time series data from 1979 to 2006, we estimated ARDL model to investigate income and price elasticities of electricity demand. Our results show that electricity demand is price inelastic in both short run and long run. Moreover, income elasticity is almost unitary in short run as well as in long run. In addition, household size has a strong positive impact on electricity demand in Pakistan. Classification-JEL: Q41, Q43 Keywords: Energy Crises, Income Elasticity, Price Elasticity, ARDL Model, Residential Demand Journal: The Pakistan Development Review Pages: 457-467 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:457-467 Template-Type: ReDIF-Article 1.0 Author-Name: Muhammad Shahbaz Author-X-Name-First: Muhammad Author-X-Name-Last: Shahbaz Author-Workplace-Name: National College of Business Administration and Economics, Lahore, Pakistan. Author-Name: Khalil Ahmad Author-X-Name-First: Khalil Author-X-Name-Last: Ahmad Author-Workplace-Name: National College of Business Administration and Economics, Lahore, Pakistan. Author-Name: A. R. Chaudhary Author-X-Name-First: A. R. Author-X-Name-Last: Chaudhary Author-Workplace-Name: National College of Business Administration and Economics, Lahore, Pakistan. Title: Economic Growth and Its Determinants in Pakistan Abstract: This paper aims to investigate the impact of macroeconomic variables on economic growth after Structural Adjustment Programme (SAP) in Pakistan. In doing so, study utilises the quarterly time series data from 1991Q1 to 2007Q4. Advanced Autoregressive Distributed Lag Model (ARDL) approach has been employed for cointegration and error correction model (ECM) for short-run results in the case of Pakistan. Empirical investigations indicate that credit to private sector (financial development), foreign direct investment and inflow of remittances correlate positively with economic growth in the long run. High inflation rate and trade-openness slow down the speed of growth rate in short as well as long run. Classification-JEL: O1, C22 Keywords: Growth, ARDL Cointegration Journal: The Pakistan Development Review Pages: 471-486 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:471-486 Template-Type: ReDIF-Article 1.0 Author-Name: Naeem Akram Author-X-Name-First: Naeem Author-X-Name-Last: Akram Author-Workplace-Name: Federal Urdu University of Arts Sciences and Technology, Islamabad. Author-Name: Ihtsham ul Haq Padda Author-X-Name-First: Ihtsham ul Haq Author-X-Name-Last: Padda Author-Workplace-Name: Federal Urdu University of Arts Sciences and Technology, Islamabad. Author-Name: Mohammad Khan Author-X-Name-First: Mohammad Author-X-Name-Last: Khan Author-Workplace-Name: Federal Urdu University of Arts Sciences and Technology, Islamabad. Title: The Long Term Impact of Health on Economic Growth in Pakistan Abstract: The paper investigates the impacts of different health indicators on economic growth in Pakistan. Cointegration and Error Correction techniques have been applied on the time series data of Pakistan for the period of 1972-2006. We find that per capita GDP is positively influenced by health indicators in the long run and health indicators cause per capita GDP. However, in short run the health indicators fail to put significant impact on per capita GDP. It reveals that health indicators have a long run impact on economic growth. It also suggests that impact of health is only a long run phenomenon and in the short run there is no significant relationship exists between health variables and economic growth. The major policy implication of the study is that if we desire high levels of per capita income, we can achieve it by increasing and improving stock of health human capital, especially when current stocks are at lower end. Moreover, study also points out a rather diminutive role of public health expenditure in determining the per capita GDP. Classification-JEL: I12, O15, C22 Keywords: Health Human Capital; Economic Growth; Cointegration, Error Correction Journal: The Pakistan Development Review Pages: 487–500 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:487-500 Template-Type: ReDIF-Article 1.0 Author-Name: Arshad Hasan Author-X-Name-First: Arshad Author-X-Name-Last: Hasan Author-Workplace-Name: Muhammad Ali Jinnah University, Islamabad. Author-Name: Zafar Mueen Nasir Author-X-Name-First: Zafar Mueen Author-X-Name-Last: Nasir Author-Workplace-Name: Pakistan institute of Development Economics, Islamabad. Title: Macroeconomic Factors and Equity Prices: An Empirical Investigation by Using ARDL Approach Abstract: This study examines the relationship between equity prices and macroeconomic variables such as inflation, industrial production, oil prices, short term interest rate, exchange rates, foreign portfolio investment, and money supply for the period 6/98 to 6/2008 by employing bounds testing procedure proposed by Pesaran, et al. (2001). Autoregressive distributed lag (ARDL) approach has been applied as yields consistent estimates of the long-run coefficients that are asymptotically normal irrespective of whether the underlying regressors are I(0) or I(1). Data has been tested for econometric problems like serial correlation, functional form, normality, heteroscdisticity and unit root by using LM test, Ramsey Reset test, skewness and kurtosis test, white test and ADF Test, and Phillip Parren Test respectively but no problem has been observed. Results of the study reveal that industrial production, oil prices and inflation are not statistically significant in determining equity prices in long run while interest rates, exchange rates and money supply have significant long run effect on equity prices. The error correction model (ECM) based upon ARDL approach confirms that changes in industrial production, oil prices and inflation are not statistically significantly in short run while changes in interest rates, exchange rates, and money supply have significant short term effect. However, foreign portfolio investment has significant short term effect but no long term effect. The tests suggest that adjustment process is quite fast and model is structurally stable . This study facilitates the investors in taking effective investment decisions by estimating the future direction of equity prices using expected trends in exchange rates, money supply and interest rate. Similarly, study suggest to the architects of monetary policy to be careful in revision of interest rates as capital market responds negatively to such decisions. The study also suggest that macroeconomic policies should be designed keeping in view the response of the capital market because efficient market hypothesis indicates that capital markets respond to new information. Classification-JEL: E31,G12 Keywords: Macroeconomic Variables, Multifactor Model, Pakistan, ARDL, Error Correction Model Journal: The Pakistan Development Review Pages: 501-513 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:501-513 Template-Type: ReDIF-Article 1.0 Author-Name: Imtiaz Ahmad Author-X-Name-First: Imtiaz Author-X-Name-Last: Ahmad Author-Workplace-Name: Planning Commission/Planning and Development Division, Government of Pakistan, Islamabad. Author-Name: Abdul Qayyum Author-X-Name-First: Abdul Author-X-Name-Last: Qayyum Author-Workplace-Name: Pakistan institute of Development Economics, Islamabad. Title: Dynamic Modeling of Private Investment in the Agricultural Sector of Pakistan Abstract: The study attempts an empirical assessment of the effects of macroeconomic instability and public expenditures on private fixed investment in agriculture. We estimated the specified private fixed investment model. First applying ADF test for unit root analysis on individual series, and then examining cointegration relationship between private fixed investment in agriculture and its determinants using Johansen (1988) method. The stable short-run dynamic function for private fixed investment in agriculture is estimated. The result confirmed that public development expenditures enhance the private investment in agriculture sector. Macroeconomic instability and uncertainty depresses private inves tment for agriculture by creating uncertain current and future environment. Journal: The Pakistan Development Review Pages: 517-530 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:517-530 Template-Type: ReDIF-Article 1.0 Author-Name: Muhammad Ali Author-X-Name-First: Muhammad Author-X-Name-Last: Ali Author-Workplace-Name: Applied Economics Research Centre (AERC), university of Karachi, Karachi. Author-Name: Syed Arifullah Author-X-Name-First: Syed Author-X-Name-Last: Arifullah Author-Workplace-Name: Applied Economics Research Centre (AERC), university of Karachi, Karachi. Author-Name: Manzoor Hussain Memon Author-X-Name-First: Manzoor Hussain Author-X-Name-Last: Memon Author-Workplace-Name: Applied Economics Research Centre (AERC), university of Karachi, Karachi. Title: Edible Oil Deficit and Its Impact on Food Expenditure in Pakistan Abstract: This study is an attempt to analyze the imp act of Edible Oil Deficit on Food Expenditure in Pakistan for the period 1971-2008. Edible oil deficit is one of the major concerns for the policy-makers in Pakistan. Despite of having agriculture based economy; Pakistan is unable to fulfil her domestic demand of edible oil by local production. This situation forces the government to import edible oil and oil seeds from other countries. This import not only increases our balance of payment deficit but also it negatively affects the ability to finance the external debt repayments. Autoregressive Distributed Lag model has been used to analyse the long run relationship amongst the variables. Other important determinants of food expenditure along with edible oil deficit were also used to check for their collective long run impact. It was found that long run negative relationship exists between edible oil deficit and food expenditure and hence the result derives the policy implication that there is a need to boost up the efforts in the agriculture sector to steadily increase the local production of oil seeds in the country. The relationship between the per capita GDP and food expenditure is found to be positive and significant with elasticity of 0.261 suggesting that 1 percent increase in per capita GDP will cause food expenditure to increase by 0.26 percent. The relationship between food subsidy and food expenditure is found to be insignificant suggesting that due to improper targeting and consumer’s perception about quality and accessibility of subsidised food, Government’s food support programmes are not effective. Classification-JEL: I31, Q18, Q11, E23, D20, E00 Keywords: Edible Oil, Production, Imports, Trade Deficit, Balance of Payments, International Trade, Oilseed Crops, Agriculture, Pakistan, Edible Oil Deficit, Demand Function, Food, Inflation, Food Inflation, Household Expenditure Journal: The Pakistan Development Review Pages: 531-546 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:531-546 Template-Type: ReDIF-Article 1.0 Author-Name: Shahzad Sharif Author-X-Name-First: Shahzad Author-X-Name-Last: Sharif Author-Workplace-Name: Department of Agriculture Economics, University of Agriculture, Faisalabad. Author-Name: M. Siddique Javed Author-X-Name-First: M. Siddique Author-X-Name-Last: Javed Author-Workplace-Name: Department of Agriculture Economics, University of Agriculture, Faisalabad. Author-Name: Azhar Abbas Author-X-Name-First: Azhar Author-X-Name-Last: Abbas Author-Workplace-Name: Department of Agriculture Economics, University of Agriculture, Faisalabad. Author-Name: Sarfraz Hassan Author-X-Name-First: Sarfraz Author-X-Name-Last: Hassan Author-Workplace-Name: Department of Environmental and Resource Economics, University of Agriculture, Faisalabad. Title: Impact of WTO’s Trade Liberalisation on Selected Food Crops in Pakistan Abstract: WTO has major implications for almost all the sectors of economy but agriculture sector is the one which is more prone to the implementation of its agreements, particularly the Agreement on Agriculture (AoA). The study intended to evaluate the impact of WTO on domestic ma rket and farm-level prices, production and consumption of major food commodities like wheat and rice and ultimately their impact on the producer’s and consumer’s surpluses. The farm level impact was also evaluated to chalk out the eventual position at farm level with the purpose to identify necessary policies and actions to cope with the new world situation. The study tries to provide a useful guide to the likely impacts of agricultural trade liberalisation. It was found that openness of the economy would affect the domestic demand, supply and consumption along with affecting the producer and consumer surpluses. It was estimated that increased prices would have increased production of wheat which would have generated a gain of producer’s surplus of Rs 10,682 million. On the other hand due to increased wholesale price of wheat, the domestic demand of wheat would have declined and caused a loss to consumer surplus of Rs 12,557 million. Similarly, the increased production of rice would have generated a gain of producer’s surplus of Rs 3,708 million. However, due to increase in the wholesale price of rice, its domestic demand would have declined thus causing a loss to consumers’ surplus. Overall the impact of the increase in the international price of wheat would have resulted in a net loss to Pakistan of Rs 1,875 million during 2004-05 while in case of rice it would have resulted in a gain of Rs 1,215 million in 2004-05. Classification-JEL: F13, F14, Q17 Keywords: Trade Liberalisation, Food Crops, Export, Consumer Surplus, Comparative Advantage, Free Trade. Journal: The Pakistan Development Review Pages: 547-563 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:547-563 Template-Type: ReDIF-Article 1.0 Author-Name: Laura Giurca Vasilescu Author-X-Name-First: Laura Giurca Author-X-Name-Last: Vasilescu Author-Workplace-Name: Faculty of Economy and Business Administration, University of Craiova, Romania. Title: Agricultural Development in the European Union: Drivers, Challenges and Perspectives Abstract: The agricultural and food sector of the EU has shown great resilience and adaptability over the last decades to a changing technological, economic and social environment. This adjustment took place within a supportive policy setting which contributed to alter the pace of this long-term process. Whereas the agri-food sector still represents today an important component of the EU economy, it has also shown critical importance for the environment and landscape in contributing over the centuries to creating and maintaining a variety of valuable semi-natural habitats and in continuing today to shape the majority of EU’s landscapes. Although a growing number of rural areas are likely to become increasingly driven by factors outside agriculture, many rural areas (in particular, those which are depopulated or dependent on farming) are expected to face particular challenges as regards economic and social sustainability. The outlook for EU agricultural markets over the next years appears fairly favourable, most notably for the arable crops and dairy sectors. However, these projections are particularly sensitive to critical assumptions regarding the economic environment, policy developments (notably for trade and biofuels) and remain subject to some uncertainties (e.g., potential impact of climate change). These positive market perspectives together with future demographic trends, macro-economic patterns and environmental conditions will have important implications for the medium-term prospects of EU rural areas. Journal: The Pakistan Development Review Pages: 565-580 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:565-580 Template-Type: ReDIF-Article 1.0 Author-Name: Zafar Iqbal Author-X-Name-First: Zafar Author-X-Name-Last: Iqbal Author-Workplace-Name: Islamic Development Bank, Jeddah, Saudi Arabia. Title: Impact of Global Financial Crisis on IDB Member Countries: The Case of Gulf Cooperation Council and Sub-Saharan Africa Abstract: 2008 was a challenging year for the Islamic Development Bank (IDB) Group as well as its member countries because of unprecedented crises (food, energy, financial and economic crises). In particular, the ongoing global financial and economic crisis is source of concern for the IDB Group because of the magnitude of its impact on member countries. The banking sector faced unexpected challenges in terms of business growth, profitability, assets quality and liquidity, especially in the Gulf Cooperation Council (GCC) region. The year also witnessed steep fall in the stock markets in GCC and Sub-Saharan Africa (SSA) regions. 2009 is also expected to be another challenging year as the global financial meltdown is causing rising unemployment and pushing more people into the poverty trap. IDB member countries may face a sizable decline in foreign capital inflows both from public and private sources. Due to weakening global economy, economic growth is to decelerate in both GCC and SSA regions. The current account surplus in GCC region is to squeeze, while in SSA region it is likely to turn into deficit. These trends portend a setback for member countries, especially in SSA region in achieving the millennium development goals (MDGs). However, the GCC region is relatively well placed to weather the ongoing financial crisis due to huge oil surpluses accumulated during the last few years, lower public debt levels, and more than one trillion sovereign wealth funds, which have cushioned the adverse impacts on investment plans in the region. In response to these crises, IDB Group has continued to enhance its development assistance and taken a number of special initiatives to help member countries mitigate the adverse impacts of these crises on their socio-economic development. However, economic recovery in member countries in the coming years will critically depend upon the deepness of the economic recession and their policy actions to revive their economies through effective socio-economic reforms. The instruments of Islamic finance can be considered a possible cure for the ailing global financial markets. Classification-JEL: E65, F36, F43, N10, O11, O53, O55 Keywords: Global Financial Crisis, IDB Member Countries, Gu lf Cooperation Council, Sub-Saharan Africa Journal: The Pakistan Development Review Pages: 583-601 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:583-601 Template-Type: ReDIF-Article 1.0 Author-Name: Akmal Hussain Author-X-Name-First: Akmal Author-X-Name-Last: Hussain Author-Workplace-Name: Beaconhouse National university, Lahore. Title: Institutional Imperatives of Poverty Reduction Journal: The Pakistan Development Review Pages: 605-630 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:605-630 Template-Type: ReDIF-Article 1.0 Author-Name: Naheed Zia Khan Author-X-Name-First: Naheed Author-X-Name-Last: Zia Khan Author-Workplace-Name: Department of Economics, Fatima Jinnah Women's university. Title: Instinctive Behaviour, Producer Surplus, and Corporate Social Responsibility Abstract: This paper addresses a phenomenon that cuts across many disciplines of the formal tradition of learning. Out of numerous multifaceted academic disciplines involved in the argument, psychology, economics and business management stand out, as reflected in the title of the study. The research on the topic is carried out by adopting an inductive approach involving intangible aspects of psychology and tangible parameters of sociology centred around the disciplines of economics and business. The author maintains that the phenomenon of Corporate Social Responsibility (CSR) represents a challenge of finding the resolution to the paradox of selfish and altruistic human motives. It is argued that quality of that resolution will be determined by the quality of positive laws of socio logy and the quality of intrapersonal regulation to help appreciate social responsibility in the presence of opportunities for maximising self-interest. The review of the literature on CSR underpins factors of international political economy responsible for promotion of the phenomenon in North and South during the last century and in the new millennium respectively. The findings lead to the conclusion that rhetoric of CSR in countries like Pakistan merits the analysis of both its motives and fall out within a North-South divide. Classification-JEL: L20 Keywords: Social Responsibility, Instinctive Behaviour, Positive Law, Ethical Behaviour, Stockholders, Technical Barriers to Trade Journal: The Pakistan Development Review Pages: 631-642 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:631-642 Template-Type: ReDIF-Article 1.0 Author-Name: Attiya Y. Javid Author-X-Name-First: Attiya Y. Author-X-Name-Last: Javid Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Robina Iqbal Author-X-Name-First: Robina Author-X-Name-Last: Iqbal Author-Workplace-Name: Freelance Researcher Title: Ownership Concentration, Corporate Governance and Firm Performance: Evidence from Pakistan Abstract: The study investigates the determinants of ownership concentration, the effect of ownership concentration on the firm’s performance with the sample of sixty representativ e firms from different manufacturing sectors of the Pakistan’s economy during 2003 to 2008. The results suggest that firms where ownership is concentrated they do not adopt better governance practices and disclose less, however board composition has posit ive and significant role. The firm specific factors affect the concentration of ownership more, the more investment opportunities provides greater incentives for ownership concentration, however, size has opposite effect and leads to diverse ownership to get wider access to funds and share ownership. The results reveal that in Pakistan corporations have more concentration of ownership which is the response of weak legal environment. The concentration of ownership by top five block-holders seems to have positive effect on firms’ profitability and performance measures. The family, foreign and director ownership also has positive affect on firm performance, however firm performance is not effected by financial institutions’ ownership. The broad implication that emerges from this study is that ownership concentration is an endogenous response of poor legal protection of the investors and seems to have significant effect on firm performance. It requires implementation of corporate governance reforms at most at par with real sector and financial sector reforms. Classification-JEL: G3, F3 Keywords: Ownership Concentration, Corporate Governance, Firm Performance, Panel Data Journal: The Pakistan Development Review Pages: 643-659 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:643-659 Template-Type: ReDIF-Article 1.0 Author-Name: M. Idrees Khawaja Author-X-Name-First: M. Idrees Author-X-Name-Last: Khawaja Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Sajawal Khan Author-X-Name-First: Sajawal Author-X-Name-Last: Khan Author-Workplace-Name: State Bank of Pakistan, Karachi. Title: Pass-through of Change in Policy Interest Rate to Market Rates Abstract: This paper examines the pass through of the change in policy interest rate of the central bank of Pakistan to market interest rates. The market rates examined include KIBOR, six month deposit rate and weighted average lending rate. More or less complete pass-through of the change in policy rate to KIBOR is observed within one month. However, the magnitude of change in policy rate to deposit and lending rate is not only low but is slow as well. The pass-through to the weighted average lending rate is 47 percent and occurs with a lag of one to one and half year. The pass-through to the deposit rate is only 16 percent and occurs with a lag of one year. The asymmetry between the magnitude of pass-through to lending and deposit rates has served to increase the interest margin of the banks. The slow pass-through to the lending and deposit rate put limits on the effectiveness of interest rate as a policy tool. The pass-through, and hence the effectiveness of monetary policy will increase if all the lending and deposit rates are floating in nature and are quoted as KIBOR-plus and KIBOR-minus respectively. Journal: The Pakistan Development Review Pages: 661-674 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:661-674 Template-Type: ReDIF-Article 1.0 Author-Name: Abdul Raheman Author-X-Name-First: Abdul Author-X-Name-Last: Raheman Author-Workplace-Name: University Institute of Managemenet Sciences, PMAS-Arid Agriculture University, Rawalpindi. Author-Name: Talat Afza Author-X-Name-First: Talat Author-X-Name-Last: Afza Author-Workplace-Name: Department of Management Sciences, COMSATS Institute of Information Technology, Lahore. Author-Name: Abdul Qayyum Author-X-Name-First: Abdul Author-X-Name-Last: Qayyum Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Mahmood Ahmed Bodla Author-X-Name-First: Mahmood Ahmed Author-X-Name-Last: Bodla Author-Workplace-Name: COMSATS Institute of Information Technology, Sahiwal. Title: Estimating Total Factor Productivity and Its Components: Evidence from Major Manufacturing Industries of Pakistan Abstract: This paper estimates the trend in total factor productivity growth for eleven major manufacturing sub-sectors/industries listed on Karachi Stock Exchange. 1998 to 2007 Malmquist total factor productivity growth indices have been calculated using nonparametric Data Envelopment Analysis which also shows TFP growth sources including efficiency change and technical change. The results of this study are showing a mixed trend for all manufacturing sub-sectors/industries in terms of TFP, technical efficiency change and technological change. Cement and Oil and Gas marketing sectors depict a relatively stable position. Most of the manufacturing industries have gained, in terms of technical efficiency but the technical change is putting a negative affect on the productivity growth except for a few industries. Classification-JEL: L6, G1, G3 Keywords: Data Envelopment Analysis, Manufacturing Sector, Malmquist Productivity Index, Total Factor Productivity, Technical Efficiency Change, Technical or Technological Change, Pakistan Journal: The Pakistan Development Review Pages: 677-694 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:677-694 Template-Type: ReDIF-Article 1.0 Author-Name: Kanwal Zahra Author-X-Name-First: Kanwal Author-X-Name-Last: Zahra Author-Workplace-Name: The Urban Unit, Punjab Planning and Development Department, Lahore. Author-Name: Pervez Azim Author-X-Name-First: Pervez Author-X-Name-Last: Azim Author-Workplace-Name: Government College University, Lahore. Author-Name: Afzal Mahmood Author-X-Name-First: Afzal Author-X-Name-Last: Mahmood Author-Workplace-Name: Federal Board of revenue. Title: Telecommunication Infrastructure Development and Economic Growth: A Panel Data Approach Abstract: The present study empirically investigate the dynamic relationship between telecommunication infrastructure and economic growth, using data from twenty-four low income, middle income and high income countries for a 18 years period, from 1985– 2003. With a panel data set, this study uses dynamic fixed effect and random effect models for estimation, which allows us to test the relationship between country’s economic growth with initial economic condition, fixed investment, population growth, government consumption as well as telecommunication infrastructure. The results show that telecommunication is both statistically significant and positively correlated to the real GDP per capita of these countries included in the study. The results are robust even after controlling for investment, population growth, past level of GDP per capita and lagged growth. The results further indicate that the telecommunication investment is subject to increasing returns, suggesting thereby that countries gain more and more with the increase in telecommunication investment. The second test, Granger’s causality test confirms the causal relationship between telecommunication infrastructure and economic growth, but the relationship is significant from telecommunication to GDP per capita side but insignificant on GDP per capita to telecommunication development side. Classification-JEL: F43, O14 Keywords: Telecommunication Growth, Panel Data, Fixed and Random Effect, Granger Causality Journal: The Pakistan Development Review Pages: 711-726 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:711-726 Template-Type: ReDIF-Article 1.0 Author-Name: Amina Tabassum Author-X-Name-First: Amina Author-X-Name-Last: Tabassum Author-Workplace-Name: Economics Department, Quaid-i-Azam university, Islamabad. Author-Name: M. Tariq Majeed Author-X-Name-First: M. Tariq Author-X-Name-Last: Majeed Author-Workplace-Name: Economics Department, Quaid-i-Azam university, Islamabad. Title: Economic Growth and Income Inequality Relationship: Role of Credit Market Imperfection Abstract: This paper examines the empirical relationship between economic growth and income inequality both at aggregate and regional level using more comparable data set for 69 developing countries over the period 1965-2003. The study identifies credit market imperfection in low-income developing countries as the likely reason for a strong negative relationship between income inequality and economic growth. While in short run the relationship between growth and income inequality might be positive but over time more income inequalities reduces economic growth. Moreover, this paper finds evidence that more physical and human capital investment, openness to trade and higher government spending have statistically significant impact on enhancing economic growth and reducing inequality. Keywords: Economic Growth, Income Inequality, Poverty, Credit Market Imperfection, Trade Openness Journal: The Pakistan Development Review Pages: 727-743 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:727-743 Template-Type: ReDIF-Article 1.0 Author-Name: Qazi Masood Ahmed Author-X-Name-First: Qazi Masood Author-X-Name-Last: Ahmed Author-Workplace-Name: Institute of Business Administration, Karachi. Author-Name: Akhtar Lodhi Author-X-Name-First: Akhtar Author-X-Name-Last: Lodhi Author-Workplace-Name: Applied Economics Research centre, Karachi. Title: Provincial Finance Commission: Options for Fiscal Transfers Abstract: The Provincial Finance Commissions were constituted in all four provinces of Pakistan in 2001. The Commissions were asked to formulate a formula for the distribution of resources among the districts in their respective province to ensure smooth functioning of the local governments and to minimise the poverty and income inequalities among the districts. This paper analyse to what extent the existing development transfers are based on the existing level of deprivation in the districts by looking at the Rank Correlation between them. This paper also runs different simulations to suggest different options for the provincial governments to improve the distribution formulas. Journal: The Pakistan Development Review Pages: 747-762 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:747-762 Template-Type: ReDIF-Article 1.0 Author-Name: Attiya Y. Javid Author-X-Name-First: Attiya Y. Author-X-Name-Last: Javid Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Umaima Arif Author-X-Name-First: Umaima Author-X-Name-Last: Arif Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Abdul Sattar Author-X-Name-First: Abdul Author-X-Name-Last: Sattar Author-Workplace-Name: Federal Bureau of Statistics, Islamabad. Title: Testing the Fiscal Theory of Price Level in Case of Pakistan Abstract: The study tests the fiscal theory of price determination for Pakistan’s economy for the period 1970 to 2007. The evidence is less clear cut to infer that authorities are following a certain type of regime fiscal dominant or monetary dominant during the sample period. The liabilities responses negatively to the innovation in surpluses, that is in the subsequent period the liabilities decreases in face of increase in surplus. This characterises monetary dominant regime, the events that give rise to surplus innovation are likely to persist causing the rise in the future surpluses and surpluses pay-off some of the debt causing the fall in the liabilities. By analysing the behaviour of nominal GDP, an innovation in surplus reduces nominal income and decreases the level of debt in the subsequent periods, this analysis also confirms the Ricardian analysis. On the other hand, the study finds that, as predicted by the fiscal theory of price determination, the occurrence of wealth effects of changes in nominal public debt may pass through to prices by increasing inflation variability in case of Pakistan. The implication that comes out of this study is that nominal public liabilities, as reflected either in money growth or in nominal public debt, matter for price stability in case of Pakistan. The authorities may be following different regimes for different time periods during the 1970-2007. Classification-JEL: E52, E62, E63, E31 Keywords: Fiscal Theory of Price Level, VAR, Fiscal Policy, Monetary Policy Journal: The Pakistan Development Review Pages: 763-778 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:763-778 Template-Type: ReDIF-Article 1.0 Author-Name: Faheem Jehangir Khan Author-X-Name-First: Faheem Author-X-Name-Last: Jehangir Khan Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Musleh ud Din Author-X-Name-First: Musleh Author-X-Name-Last: ud Din Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Attitude Towards Civil Service of Pakistan: A Perception Survey Abstract: Amid growing concerns on the popularity of the civil service among the students, the study reports the findings of a perception survey of enrolled university students. Contrary to common perceptions, the results suggest that the civil service still retains its allure among the potential entrants. Those who prefer the civil service as a career are more concerned with job security than those who prefer a job in the private sector. The Foreign Service of Pakistan appears to be the most favourite group whereas the Accounts Group is the least preferred. The District Management Group (DMG) seems to no longer enjoy a coveted position due perhaps to the implementation of the devolution plan which has stripped the group of its power and privileges. Classification-JEL: H83, J24, M51 Keywords: Students, Civil Service, Public Choice, Job Search, Employment Decision Journal: The Pakistan Development Review Pages: 779-790 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:779-790 Template-Type: ReDIF-Article 1.0 Author-Name: Shahid Ali Author-X-Name-First: Shahid Author-X-Name-Last: Ali Author-Workplace-Name: Institute of Business Administration and Applied Economics Research Centre, University of Karachi. Author-Name: Somia Irum Author-X-Name-First: Somia Author-X-Name-Last: Irum Author-Workplace-Name: Applied Economics Research Centre, University of Karachi. Author-Name: Asghar Ali Author-X-Name-First: Asghar Author-X-Name-Last: Ali Author-Workplace-Name: Applied Economics Research Centre, University of Karachi. Title: Whether Fiscal Stance or Monetary Policy is Effective for Economic Growth in Case of South Asian Countries? Abstract: The relative significance of fiscal and monetary policy has been one of the most unsettled issues in economics. Relevant literature shows that the study of the effectiveness of monetary and fiscal policy is equivalent to the study of the relative efficacy of Keynesian economics and monetarism. This study investigates the relative effectiveness of both types of policies in the context of modern panel data analysis in case of South Asian Countries during the period from 1990 to 2007 to test the Monetarist and Keynesian claims, and to find out that whether the policy instruments have a significant relationship with economic growth. Im, Pesaran, and Shin and Levin, Lin, and Chu tests have been used to investigate the order of integration. For long run and short run relationship we utilis ed the advance Autoregressive Distributed Lag Model ARDL a co-integration (panel) test and ECM (Error Correction Method) respectively. Classification-JEL: E62, E52, C33 Keywords: Fiscal Policy, Monetary Policy, Panel Co-integration Journal: The Pakistan Development Review Pages: 791-799 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:791-799 Template-Type: ReDIF-Article 1.0 Author-Name: Paul A. Dorosh Author-X-Name-First: Paul Author-X-Name-Last: A. Dorosh Author-Workplace-Name: International Food Policy Research institute (IFPRI), Ethiopia. Title: Regional Trade and Food Price Stablisation in South Asia: Policy Responses to the 2007-08 World Price Shocks Abstract: World price shocks and disruptions in international cereal trade in 2007 and 2008 caused considerable anxiety and hardship for food importing countries throughout the world. In South Asia, Pakistan, Afghanistan, Bangladesh and India were all affected by these movements in international prices, though the effects on domestic prices in each case was mitigated or exacerbated by each country’s own trade policies, as well as the trade policies of its neighbours. This paper reviews domestic and international trade policies in South Asia in recent years and argues that liberalised international trade still provides the best mechanism for stabilising prices and food supplies in most years. Nonetheless, appropriate contingency policies still are needed for years in which international prices are extraordinarily high. More explicit commitments to cereal trade liberalisation within South Asia would also promote region-wide food security and help avoid a repetition of export supply disruptions by India that contributed to sharp rises in food prices in Bangladesh, and similar restrictions by Pakistan that contributed to food price increases in Afghanistan. Classification-JEL: Q18, Q17, O24 Keywords: Food Security, Price Stabilisation, Trade Policy, Food Stocks, South Asia Journal: The Pakistan Development Review Pages: 803-813 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:803-813 Template-Type: ReDIF-Article 1.0 Author-Name: M. E. Tusneem Author-X-Name-First: M. E. Author-X-Name-Last: Tusneem Author-Workplace-Name: Food and Agriculture, Planning Commission, Islamabad. Title: Food Security in a Changing Climate Journal: The Pakistan Development Review Pages: 815-816 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:815-816 Template-Type: ReDIF-Article 1.0 Author-Name: Zakir Hussain Author-X-Name-First: Zakir Author-X-Name-Last: Hussain Author-Workplace-Name: Department of Economics, university of Sargodha. Author-Name: Waqar Akram Author-X-Name-First: Waqar Author-X-Name-Last: Akram Author-Workplace-Name: Department of Economics, Government College University, Faisalabad. Title: Persistent Food Insecurity from Policy Failures in Pakistan Abstract: The observable fact was known to be hunger in the 1980s but now terminology has been shifted to insecurity. Improving the household food security is an issue of supreme importance in millions of people in the world who are suffering from persistent hunger and malnutrition and those who are at risk of doing such in the future. Many developing countries are making efforts to improve this situation but they are facing budgetary and resource constraints. Achieving a sufficient food supply and making it sustainable remains a global challenge. Indus agriculture system in Pakistan has experienced a Green Revolution and is striving for yellow and blue revolutions. However, it could have not done far better due to inconsistent and incompatible agriculture policies. Wheat, rice and maize are the dominant food crops in Pakistan. Several programmes and policies have attempted to increase the productivity of these crops and help consumers against better access to food. Wheat is the staple food for Pakistan and due to its erratic production food security becomes insecure; however, if wheat production is coupled with rice and maize Pakistan is a food secure country. The policy paper has reviewed issues confronting the food security equation of the country. The paper highlights the determinants of the food security and policy issues. The lopsided government food and agriculture policies are the main cause of persistent food insecurity in the country. Keywords: Food Insecurity, Economics Access, Poverty and Terms of Trade Journal: The Pakistan Development Review Pages: 817-834 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:817-834 Template-Type: ReDIF-Article 1.0 Author-Name: Ather Maqssod Ahmed Author-X-Name-First: Ather Maqssod Author-X-Name-Last: Ahmed Author-Workplace-Name: NUST Business School, National University of Science and Technology (NUST), Islamabad. Author-Name: Asma Hyder Author-X-Name-First: Asma Author-X-Name-Last: Hyder Author-Workplace-Name: NUST Business School, National University of Science and Technology (NUST), Islamabad. Title: Sticky Floors and Occupational Segregation: Evidence from Pakistan Abstract: The paper uses the micro data from nationwide Pakistan Labour Force Survey 2005-06 to examine the hypothesis of glass ceilings and sticky floors, both in public and private sectors. The study explores the conditional gender wage distributions at different quantiles—a subject that so far has not attracted much attention in Pakistan. The results support that the gender wage differentials monotonically increase as one moves towards the bottom floor of the conditional wage distribution, i.e., the evidence validates the sticky floor hypothesis. The second sub-theme of the paper has been to investigate those factors that encourage occupational segregation in the labour market. For this purpose, an index of occupational segregation has been calculated for each of the occupational group. The value of Duncan’s D (Duncan Gender Occupational Dissimilarity Index) suggests that 40 percent employees (both men and women) have to change their jobs for an identical male and female labour force distributions. As a final result it has been established that the female participation has been very low, particularly in high paid occupational categories like mangers, legislators and senior officials. Keywords: Food Insecurity, Economics Access, Poverty and Terms of Trade Journal: The Pakistan Development Review Pages: 837-849 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:837-849 Template-Type: ReDIF-Article 1.0 Author-Name: Rashida Haq Author-X-Name-First: Rashida Author-X-Name-Last: Haq Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Author-Name: Uzma Zia Author-X-Name-First: Uzma Author-X-Name-Last: Zia Author-Workplace-Name: Pakistan Institute of Development Economics, Islamabad. Title: Dimensions of Well-being and the Millennium Development Goals Abstract: Well-being and happiness, individually and collectively, is a main indicator of a good life. This paper attempts to implement empirically some of the multidimensional concepts of human well-being by using data from the ‘Pakistan Living Standards Measurement Survey’ 2006-07. Objective well-being index and subjective well-being index are constructed to study regional disparities in the quality of life. The results reveal that most of the top ranked districts are located in the province of Punjab which tends to indicate that Punjab is ahead of other provinces in terms of objective well-being. Sindh and NWFP districts are dominated in the category of lower medium well-being category. At the lower end of the distribution districts of Balochistan emerged in lowest category of well-being. It is observed that Punjab have highest share of population in top category of well-being while population of Balochistan gets major share in lowest category of wellbeing. It is important to note that those districts which have higher achievements in hard facts of well-being, acquire less subjective well-being in term of satisfaction. Districts of Balochistan, with least developed indicators, perception about the quality of life is evident in their lowest level of satisfaction. Since the underlying premise of the MDGs is still the concept of human development, so priorities is needed to concentrate on least developed districts for achieving the MDGs by 2015. Classification-JEL: I31, I32, D19, D78 Keywords: Well-being, Objective, Subjective, Measurement, Quality of Life Journal: The Pakistan Development Review Pages: 851-876 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:851-876 Template-Type: ReDIF-Article 1.0 Author-Name: Sonia Ahmad Author-X-Name-First: Sonia Author-X-Name-Last: Ahmad Author-Workplace-Name: Department of Economics, Beaconhouse National University, Lahore. Author-Name: Ahmed Gulzar Author-X-Name-First: Ahmed Author-X-Name-Last: Gulzar Author-Workplace-Name: Department of Economics, Beaconhouse National University, Lahore. Title: Inter-city Variation in Prices Abstract: In this paper we have constructed a relative cost of living index for 32 cities/towns of Pakistan using latest available prices to understand the extent of current differences in cost of living across cities and also to compare changes in relative cost of living since 1999 [Pasha and Pasha (2002)]. The index values reveal significant differences in cost of living across Pakistan and especially across provinces with prices significantly higher in Balochistan (overall) and NWFP (for wheat). When regressed against various explanatory variables, the variation in cost of living appears to be determined by the population in cubic form (reaching a minimum for a city size of 2.1 million) and the provincial affiliation of cities. The index also reveals that relative to 1999, the economy as a whole appears to have become less integrated as the difference in prices across cities is much greater than in 1999. However, cities in Sindh due to their close proximity to the port have become less expensive because of the increased share of imports in consumption. The findings of this paper have very important implications for public policy with respect to transfer payments to relieve poverty, urban development, inter-provincial trade and transport and allocation of development funds among provinces. Classification-JEL: R, R1, R11 Keywords: Regional Economics Measurement, Regional Economic Activity, Growth, Development, and Changes Journal: The Pakistan Development Review Pages: 877-892 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:877-892 Template-Type: ReDIF-Article 1.0 Author-Name: Tamkinat Rauf Author-X-Name-First: Tamkinat Author-X-Name-Last: Rauf Author-Workplace-Name: Economic Analysis Department, State Bank of Pakistan, Karachi. Author-Name: M. Wasif Siddiqi Author-X-Name-First: M. Wasif Author-X-Name-Last: Siddiqi Author-Workplace-Name: Government College university, Lahore. Title: Price-setting for Residential Water: Estimation of Water Demand in Lahore Abstract: The Water and Sewerage Agency (WASA) of Lahore is facing soaring demand and rising costs. But while massive investments are made to augment supply, tariffs remain low and are not adjusted in line with growing expenses. This has resulted not only in heavy and increasingly unsustainable reliance on loans and subsidies, but also in consumers undervaluing the resource, resulting in its inefficient utilisation. In this scenario, water tariffs badly need to be reformed. This study explores the potential of a pricing policy to regulate residential water demand in order to achieve the objectives of cost recovery, efficient water use, and equitable allocation of water resources. To this end, a demand function is estimated using household level data about water consumption and socio-economic characteristics of 156 households supplied by WASA, Lahore, for the period 2004-2006. Under block-rate tariffs the price variable is endogenously determined and a system of simultaneous equations emerges, solved here using two-stage least squares method. The estimated model explains 57 percent variation in water demand. The study finds water demand to be inelastic to price and, considering WASA’s exceedingly low tariffs, recommends up to 50 percent increase in the current tariff structure. Further computations show that a 50 percent increase will not endanger lifeline water supply. However, tariff increases may not be felt uniformly across all income groups, and absence of income data remains a limitation of this study. The study also recommends linking the non-volumetric part of tariffs to wealth-determined variables, such as property value and income. Keywords: Water Demand; Price-setting Journal: The Pakistan Development Review Pages: 893-906 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:893-906 Template-Type: ReDIF-Article 1.0 Author-Name: Amara Amjad Hashmi Author-X-Name-First: Amara Author-X-Name-Last: Amjad Hashmi Author-Workplace-Name: Department of Economics, University of Sargodha. Author-Name: Maqbool H. Sial Author-X-Name-First: Maqbool H. Author-X-Name-Last: Sial Author-Workplace-Name: Department of Economics, University of Sargodha. Author-Name: Maaida Hussain Hashmi Author-X-Name-First: Maaida Hussain Author-X-Name-Last: Hashmi Author-Workplace-Name: Department of Economics, University of Sargodha. Title: Trends and Determinants of Rural Poverty: A Logistic Regression Analysis of Selected Districts of Punjab Abstract: Poverty is widespread in the rural areas, where the people are in a state of human deprivation with regard to incomes, clothing, housing, health care, education, sanitary facilities and human rights. Nearly 61 percent of the country’s populations live in rural areas. In Pakistan poverty has been increased in rural areas and is higher than urban areas. Of the total rural population 65 percent are directly or indirectly linked with agriculture sector. In Pakistan more than 44.8 percent people generate their income from agriculture sector, and the higher rate of increase in poverty in the rural areas has provoked debate on growth and productivity trends in the agriculture sector. Therefore, it is the need of the hour to determine such factors which affect the poverty status of a rural household. Utilising unique IFPRI (International Food Policy Research Institute) panel data together with sub-sample of PRHS (Pakistan Rural Household Survey) for two districts of Punjab (Attock and Faisalabad) the present study aim at analysing and estimating the rural poverty trends and determinants of rural poverty from the late 1980s to 2002. The data was analysed by using binary logistic model and head count measure. The results show that the chance of a household tripping to poverty increased due to increase in household size, dependency ratio, while, education, value of livestock, remittances and farming decreased the likelihood of being a poor. Moreover, the socio-economic opportunities as represented by the availability of infrastructure in the residential region also play a significant role in the level of poverty faced by a household. This study makes a modest contribution by attempting to analyse the need for focusing on anti-poverty policies, which can nip the evil in the bud. Classification-JEL: O18, I32 Keywords: Rural Poverty, Poverty Trends, Agriculture Growth, Determinants Journal: The Pakistan Development Review Pages: 909-923 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:909-923 Template-Type: ReDIF-Article 1.0 Author-Name: Abdul Jalil Khan Author-X-Name-First: Abdul Jalil Author-X-Name-Last: Khan Author-Workplace-Name: Department of Economics, Government College University, Lahore. Title: Is There Any Role of Technological Inputs? A District-wise Analysis of Output Differential in Crop Sector Abstract: An investigation is performed to analyse the impact of technological inputs accompanied with traditional inputs over different periods of time on the output differential of four major crops including Wheat, Rice, Cotton and Sugarcane. Data related to different districts of the Punjab province have been used to conduct the study. A multivariate statistical analysis is applied for this purpose, in which principal component (factor) analyses is carried out as a first step to reduce the dimensionalities in the data and to obtain the ranking of districts in two phases of time i.e., 1971-75 and 2001-05. Further analysis is made by developing indices on the basis of few selected top and low ranked districts four each; along with one more district as a special case due to pronounced improvement in its ranking. Technological inputs showed consistency and significant contribution towards crop output over the time with some district wise differentials. Classification-JEL: O18, Q16, R34 Keywords: Technological Inputs, Crop Output, Index, District Journal: The Pakistan Development Review Pages: 925-946 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:925-946 Template-Type: ReDIF-Article 1.0 Author-Name: Syeda Rizwana Shah Author-X-Name-First: Syeda Rizwana Author-X-Name-Last: Shah Author-Workplace-Name: Department of Economics, University of Sargodha. Author-Name: Aqsa Tabassam Bukhari Author-X-Name-First: Aqsa Tabassam Author-X-Name-Last: Bukhari Author-Workplace-Name: Department of Economics, University of Sargodha. Author-Name: Amara Amjad Hashmi Author-X-Name-First: Amara Author-X-Name-Last: Amjad Hashmi Author-Workplace-Name: Department of Economics, University of Sargodha. Author-Name: Sofia Anwer Author-X-Name-First: Sofia Author-X-Name-Last: Anwer Author-Workplace-Name: Department of Economics, University of Sargodha. Title: Determination of Credit Programme Participation and Socioeconomic Characteristics of Beneficiaries:Evidence from Sargodha Abstract: In Pakistan about 65 percent population live in rural areas. The rural credit markets are segmented and imperfect. Micro -credit is considered as a valuable technique to deal with imperfections of credit markets. In this study, we analysed rural credit market of District Sargodha, Pakistan to study the socio economic characteristics of the beneficiaries and identify the determinants of participation in credit programme in the year 2004-2005. To analyse characteristic the descriptive analysis was used. For identifying the factors affecting household access to credit and participation in programme, a binary Logistic regression model was employed. Results of both analyses showed that at household level, participation in credit programme was significantly related to household characteristics, where participants were indifferent to increase in rate of interest. More than 80 percent loan came from informal sector but the probability of participation significantly increased if there existed any formal financial institution. Journal: The Pakistan Development Review Pages: 947-959 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:947-959 Template-Type: ReDIF-Article 1.0 Author-Name: Adnan Haider Bukhari Author-X-Name-First: Adnan Haider Author-X-Name-Last: Bukhari Author-Workplace-Name: Research Department, State Bank of Pakistan, Karachi. Author-Name: Safdar Ullah Khan Author-X-Name-First: Safdar Ullah Author-X-Name-Last: Khan Author-Workplace-Name: Technology and Sustainable Development, Bond University, Australia. Title: A Small Open Economy DSGE Model for Pakistan Abstract: This paper estimates a small open economy Dynamic Stochastic General Equilibrium (DSGE) model for Pakistan using Bayesian simulation approach. Model setup is based on new Keynesian framework, characterised by nominal rigidity in prices with habit formation in household’s consumption. The core objective is to study whether an estimated small open economy DSGE model provides a realistic behavior about the structure Pakistan economy with fully articulated description of the monetary policy transmission mechanism vis -à-vis domestic firm’s price setting behavior. To do so, we analyse the impulse responses of key macro variables; domestic inflation, imported inflation, output, consumption, interest rate, exchange rate, term of trade to different structural/exogenous shocks. From several interesting results, few are; (a) high inflation in Pakistan do not hit domestic consumption significantly; (b) Central bank of Pakistan responds to high inflation by increasing the policy rate by 100 to 200 bps; (c) exchange rate appreciates in both the cases of high domestic and imported inflation; (d) tight monetary policy stance helps to curb domestic inflation as well as imported inflation but appreciates exchange rate significantly (f) pass through of exchange rate to domestic inflation is very low; finally parameter value of domestic price stickiness shows that around 24 percent domestic firms do not re-optimise their prices which implies averaged price contract is about two quarters. Classification-JEL: E32, E47, E52, F37, F47 Keywords: New-Keynesian Economics, Open Economy DSGE Models, Nominal Rigidities, Monetary Policy, Transmission Mechanism, Bayesian Approach Journal: The Pakistan Development Review Pages: 963-1008 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:963-1008 Template-Type: ReDIF-Article 1.0 Author-Name: Khalid Rahman Author-X-Name-First: Khalid Author-X-Name-Last: Rahman Author-Workplace-Name: International Consultant on Energy, Lahore. Title: Pakistan’s Energy Security Challenge: Some Observations and Thoughts Journal: The Pakistan Development Review Pages: 1011-1017 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:1011-1017 Template-Type: ReDIF-Article 1.0 Author-Name: N. A. Zuberi Author-X-Name-First: N. A. Author-X-Name-Last: Zuberi Author-Workplace-Name: Private Power and Infrastructure Board, Government of Pakistan, Islamabad. Title: Private Power Generation—Opportunities and Challenges Journal: The Pakistan Development Review Pages: 1019-1027 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:1019-1027 Template-Type: ReDIF-Article 1.0 Author-Name: Raza Hameed Author-X-Name-First: Raza Author-X-Name-Last: Hameed Author-Workplace-Name: Small Cottage Industries, Gujranwala. Title: Demand and Supply Issue Journal: The Pakistan Development Review Pages: 1029-1033 Volume: 47 Issue: 4 Year: 2008 File-URL: http://www.pide.org.pk/pdf/Volume47/Issue4-2008.pdf File-Format: Application/pdf File-Restriction: Access to the full text is restricted. Please contact our publication Division for full article Email: publications@pide.org.pk Phone: +92-51-9248089 Handle: RePEc:pid:journl:v:47:y:2008:i:4:p:1029-1033