Analysis of Flue-cured Tobacco Supply Elasticity in Zimbabwe 1980-2010: An Error Correction Model Approach
AbstractFlue cured tobacco has been an important crop for the Zimbabwean economy historically in terms of foreign currency earnings and employment creation. Between 1980 and 2000, there is a general increase in tobacco output, followed by a sharp decline from 2001 up to 2008 and then output starts to increase again. Flue cured tobacco output as measured by the quantity that is delivered to the auction floors is used to estimate supply elasticity. The objective is to determine if flue-cured tobacco supply is price elastic and whether price incentives alone will boost supply in the short -run. Time series data on flue cured tobacco output, prices, production costs, prices of major competing crops, the exchange rates and inflation are analysed to model the price elasticity of flue cured tobacco between 1980 and 2010. The Augmented Dickey –Fuller unit root test is performed to test the variables for stationarity. The data generating processes show these data series to be non-stationary and therefore OLS estimations would be biased. The data series are differenced and the Engel-Granger procedure is performed to test for cointegration. The Error Correction Model approach is used to estimate flue cured tobacco supply. Flue cured tobacco supply is found to be price inelastic in the short –run.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Australian Agricultural and Resource Economics Society in its series 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia with number 100696.
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200
Phone: 0409 032 338
Web page: http://www.aares.info/
More information through EDIRC
Supply elasticity; stationary data; cointegration; error correction model.; Research Methods/ Statistical Methods;
This paper has been announced in the following NEP Reports:
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.