Pakistan Journal of Applied Economics

1-13

Authors: M. Adetunji BABATUNDE,* M. Isa SHUAIBU

This paper examines the residential demand for electricity in Nigeria as a function of real gross domestic product per capita, price of electricity, and price of a substitute between 1970 to 2007. The bounds testing approach used to cointegration within an autoregressive distributed framework, suggested by Pesaran et al. (2001). In the long run, we found that income and the price of substitute emerges as the main determinant of electricity demand in Nigeria, while electricity price is insignificant. The relationship among the variables is stable and significant.

37-52

Authors: Naeem AKRAM*, Syed Imran RAIS and Ihtsham ul Haq PADDA**

Price stability is one of the key objective of public policy. Ever increasing prices have negative implications for economic growth and poverty. The present study attempts to analyze; how prices in Pakistan are affected by monetary and fiscal policies. It analyzes the interaction of domestic debt, fiscal deficit, money supply and exchange rate with the price level, by applying the VAR decomposition, Granger causality and Impulse response models. The study uses data for the period 1973 to 2010. The results reveal that in Pakistan both Monetary and Fiscal policies play significant role in determination of prices. However, the role of fiscal policy is comparatively stronger than monetary policy as it has both direct and indirect impacts on prices. As the fiscal deficit and domestic debt also affects prices through money supply. Furthermore, the effects of inflationary expectations on prices are highest in magnitude. The study suggests that to cope with increasing prices the coordination between fiscal and monetary policies is necessary.

69-91

Authors: Sandeep KAUR,* Parmjit NANDA**

Among the SAARC countries, India, Bangladesh and Sri Lanka had a share of 2.1 per cent, 1.4 per cent and 0.9 percent respectively, in the total exports of Pakistan. Therefore, it becomes imperative to study Pakistan’s export potential in relation to SAARC countries. It was further recorded that all SAARC countries’ trade including Pakistan is intense with one or two markets during the study period. Therefore, the present study aims at finding whether Pakistan has the potential to export to these nations by using gravity model. Pakistan’s export potential to SAARC nations (Bangladesh, Bhutan, India, Maldives, Nepal and Sri Lanka) was calculated with the help of gravity model of exports using panel data methodology (pooled model, fixed effect model and random effect model) by employing the data over time period 1981-2005. To find out the convergence and divergence of Pakistan’s exports to SAARC members, speed of convergence has been used. The study revealed that, there was presence of convergence in Pakistan’s exports with SAARC countries; in other words, actual Pakistan’s exports to SAARC countries converged towards the estimated export potential. The study also found that among SAARC countries, Pakistan’s net export potential exists for Bhutan, India, Maldives and Nepal. Bhutan, Maldives and Nepal are not only far away from Pakistan but they do not have any common borders with Pakistan. Therefore, Pakistan needs facility for transit trade with Maldives, Nepal and Bhutan, through India to realized its export potential.