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|Title:||The World Market for Jute: An Econometric Analysis|
|Authors:||Mujeri , Mustafa Kamal|
|Abstract:||<p> This study is an empirical analysis of the international market for raw jute and jute manufactures. The object of the study is to build and estimate an annual simultaneous equation model of the world jute market for the post-Second World War years. The chief purpose of the model is to determine the most important dynamic aspects of this market and, in particular, the causes of the high variability of the world jute prices.</p> <p> The supply side of the model involves the specification and estimation of dynamic equations relating to the annual production of both raw jute and jute manufactures. In the case of raw jute production, equations are estimated for three major producing nations and for the "Rest-of-the-World"; in the case of jute manufactures, there are equations for six major producing nations as well as for a "Rest-of-the-World" sector. In general, jute farmers and the producers of jute manufactures are found to be responsive to economic incentives.</p> <p> The demand side of the model is constructed by specifying and estimating equations explaining the annual net consumption demand of jute manufactures for Bangladesh and India. In the case of other five countries/regions, first, the total current consumption demand for jute manufactures and synthetic substitutes are estimated together and, then, the relative shares of the two are determined. In contrast to the fairly uniform results obtained for the jute production equations, the effects of change in one of the explanatory variables on jute consumption are found to vary widely for the countries studied.</p> <p> Equations explaining end-of-the-year stocks of both raw jute and jute manufactures in the major producing countries have been specified and estimated. Finally, the price equations, explaining the formation of world prices of raw jute and jute manufactures and their relationship with the domestic prices in the major producing countries, have been estimated to complete the empirical model.</p> <p> The final model contains thirty-nine stochastic equations and twenty-five identities, and is decomposed into two blocks: a recursive block, which is estimated by ordinary least squares, and a simultaneous block, which is estimated by two-stage least squares. The study then proceeds to examine the qualitative characteristics of the model by conducting simulation experiments over part of the period of estimation. The model is further tested to explore some interesting hypothetical forms of international jute agreements. Moreover, simulations over future periods are also investigated in order to obtain conditional forecasts and to explore further some of the hypothetical international agreements. In general during the sample period, the basic simulation traces quite satisfactorily, on both the aggregate and the disaggregate level, the trajectories of the important endogenous variable in the model. The simulations over the 1974-1990 period imply practically a stagnation of the position with relatively small increases in world production, consumption, and prices. Moreover, the present trend of decreasing the consumption of jute manufactures in the developed countries is expected to continue.</p> <p> Finally, in respect to possible institution of various international agreements to benefit (in part, at least) the raw jute producers, it has been found that, in most cases, these programs will have very limited benefits (although both the producers and the consumers might benefit from increased price stability) due to high and increasing elasticity of substitution between jute and the synthetic substitutes</p>|
|Appears in Collections:||Open Access Dissertations and Theses|
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