Economic Analysis of Maize Supply Response in Iraq Using Cointegration and Error Correction For The Period 1980-2014 | ||
| Journal of Tikrit University For Agriculture Sciences | ||
| Article 1, Volume 17, Issue 1, April 2017, Pages 274-286 | ||
| Authors | ||
| Raghad Jalal Ali; Khalid M. Al-Zubaidi; Zahra Hadi Mahmood | ||
| Abstract | ||
| Maize is considered as one of the most important nutritional and industrial crop in many worlds' regions. That is because it is a main nutritional source that provides the animal breeding projects with the essential forage material. This study aimed to estimate maize supply response for the period 1980-2014 using cointegartion and error correction model. To accomplish this aim, the main factors influencing maize supply response were determined. These included maize price, competing crop (sunflower) price, total production and irrigation water. To avoid spurious regression problem, time series of the model variables were analyzed using augmented Dicky Fuller (ADF). The result of this test revealed that the time series were non-stationary at their levels, stationary at their first differences and they were all cointegrated except the production risk which was stationary at level. To estimate the effect of short and long run determinants on the maize-cultivated area (MCA), vector error correction model (VECM) was used. The result showed the significant of maize price, sunflower price, total production and irrigation water. These variables represented about 74% of the change in MCA in Iraq. According to the results of VECM, MCA is corrected from disequilibrium in every previous period by -0.4798 toward its equilibrium value. The speed of adjusting takes 2 years after the shock in the model which results from the change in one of the explanatory variables. Estimated elasticities indicated that price elasticities of maize in relation to its price were 0.43164 and 0.727890 in the short and long run respectively; whereas cross elasticities for maize were -0.34201 and -0.770213 in the short and long run respectively. Maize supply elasticities in relation to the irrigation water were 0.518443 in the short run and 0.858810 in the long run. As the elasticities values were less than one, the supply of this crop could be described as inelastic. | ||
| Keywords | ||
| Maize; supply response; Cointegration; error correction; time series | ||
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