Journals of Forman Christian College
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Risk return and asymmetric volatility at the Karachi stock exchange: Eatzaz Ahmad
No full textThis study finds strong evidence of volatility inertia in returns at Karachi Stock Exchange and a mixed evidence for the presence of risk premium. The main finding of the study is that contrary to theory the positive return shocks have greater effect on volatility than the negative shocks. The study concludes that current recession in the stock market reflects weak fundamentals rather than pessimistic sentiments. Government interventions to artificially improve the market outlook are unlikely to produce sustainable effects and can result in market inefficienc
Money Demand Function for Pakistan
Full text linkThe main objective of this study is to empirically estimate the long run money demand function for Pakistan using time series data. For this purpose we used annual data from 1953 to 2003. The results of unit root analysis have suggested that both log of nominal GDP and log price are possibly I (2) variables. The results of unit root with structural break for real M1 and M2 have suggested that log of real M1 is fractionally integrated where as log of real M2 is trend stationary. Results of I(2) co-integration analysis have suggested that there are some I(2) trends in the model with nominal variables hence in order to avoid complications involved in the analysis of I(2) trends we transformed our model in real variables. We found one co-integration relation for both M1 and M2. The sign of the estimated coefficients for GDP and interest rate in M1 money demand function are according to theory but coefficient of interest rate has wrong sign for M2 money demand relation but it is statistically insignificant. We accepted the hypothesis that both real GDP and interest rate are weakly exogenous in long run money demand relation for both M1 and M2. Demand for money for both M1 and M2 are found to be inelastic with respect to interest rate which is quite obvious for an underdeveloped country like Pakistan where financial markets are underdeveloped, infrastructure is poor and information system is still very slow
WTO, Economic Reforms and Export Competitiveness: Muhammad Naveed Iftikhar and Muhammad Aslam Chaudhary1
No full textThe paper analyzes the impacts of trade liberalization in response to WTO and other economic reforms. In this respect, major economics reforms, terms of trade, commodity concentration (CCI) and geographic concentration (GCI) have been estimated. Besides competitiveness is also analyzed by utilizing Revealed Comparative advantage. Revealed comparative Advantage (RCA) has been estimated for 74 commodity groups for the year 2005 and it is compared with Chaudhary (2000) estimates of RCA for the same commodity groups. Empirical results indicate that, over time, Pakistan has lost its competitiveness, which was improving up to 2000. RCA shows that Pakistan has lost RCA for 7 commodity groups (out of 29) as compared with the year 2000 within five years. Thus, trade liberalization has not been fruitful so far. There is also hardly any improvement in CCI, rather GCI has been deteriorated. Trade deficit has been enhanced overtime and it has emerged as one of the main economic problems for Pakistan. The very reason that Pakistan has again contacted IMF for its survival. In the light of above, there is a need that policy maker must be careful before further liberalization and privatization
Household Consumption Patterns in Pakistan:A Rural-Urban Analysis: Babar Aziz and Shahnawaz Malik
Full text linkThis paper attempts to analyze various elasticities; expenditure(income), own-price and household size in relation to a varietyof Aggregate Food Commodity (AFC) groups. The outcome ofthis research reflects that most of the estimated elasticities aresignificant and reasonable in magnitude. It is observed thatcereal’s group has a fixed position in the menu of the Pakistaniconsumers; in both rural and an urban region. Theexpenditures on vegetables and meats increase with higherincome in rural areas weigh against the urban areas.However, the expenditures on fruits, and milk and milkproducts are more likely to increase with higher income bothin urban areas than in rural areas. Besides, household size hasa significant impact on household food expenditures. Theexpenditures on most food groups increase at a decreasingrate as household size increases
Dynamic Impact of Remittances on Economic Growth: A Case Study of Pakistan
Full text linkRemittances are one of the largest sources of financial inflow for developing countries. In recent years, they have gained significant importance for their role in balance of payments. In this study, we examine the dynamic impact of workers’ remittances on economic growth of Pakistan. For this purpose, we used a Keynesian type simultaneous econometric model with a dynamic perspective. The macroeconomic key variables are investigated with an eventual purpose of estimating their respective contributions to economic growth. It is found that the highest induced growth rate by remittances to output growth took place in the early 1980s particularly, 1982-83 which corresponds to the high inflow of remittances from the Middle East. Our analysis shows that, although the workers’ remittances mostly used for private consumption and partially for imports but it contributed to growth positively through the multiplier effects.
Estimating Food Demand Elasticities in Pakistan: An Application of Almost Ideal Demand System: Babar Aziz, Khalil Mudassar, Zahid Iqbal and Ijaz Hussain
Full text linkThe main focus of the study is to estimate the rural-urban income and own price elasticities across a range of consumption quintiles. The Linear Approximate Almost Ideal Demand System (LAAIDS) is used to estimate the parameters of aggregate food commodity groups. Due to the specific features of the data, spatial variations in regional prices are estimated and used as proxies for food prices (i.e. unit values) by using household survey data. Regarding household specific elasticity estimates, households exhibit increasing consumption of vegetables, fruits, milk and meats with higher income. The expenditure elasticities are larger in rural areas compared to urban areas and expenditures on most food groups increase at a decreasing rate as income increases. Expenditure elasticities for all food groups were positive and less than one, except for fruits, meats, and milk that have been identified as luxuries. Cereals tend to have the lowest expenditure elasticity of demand. The uncompensated own-price elasticities of demand for all food groups are negative and their absolute amounts are lower than unity i.e. demand reacts in-elastically to own-price changes, except for meats (elastic). According to the values of the cross-price elasticities and on the level of all selected food groups, only substitution relationships are observed. The high price elasticities of demand for many food items stress the importance of food price changes for households, and their reactions should be taken into account in the development of comprehensive agricultural and food policies in Pakistan
Factors Influencing Student Achievement Scores: Public vs. Private Schools
No full textThere are evidences of relationship between the performances of primaryschool student’s achievement scores with socioeconomic status of thehousehold. Literature mostly point out the effect of school quality onstudents’ achievement. Based on the existing literature, this study hasexplored the effect of school choice, quality and socioeconomic status of thehousehold on student achievement score in case of Pakistan. Findingsindicate that choice of schooling and teacher’s characteristics play animportant role in student performance
Relationship between Real and Nominal Uncertainty in Pakistan: Muhammad Jamil and Sumbal Majeed
No full textThe paper explores the link between inflation and output growth variability in Pakistan. The study uses quarterly data for the period 1980:1 to 2010:2. The paper employs Bivariate GARCH (BEKK) model to simultaneously estimate conditional variances of output growth and inflation and covariance between them. The conditional variances of output growth and inflation are used as indicators of real and nominal uncertainty in the present study. It is also found that higher inflation is responsible for creating uncertainty about inflation in Pakistan, and this higher inflation uncertainty impacts economic growth negatively in Pakistan. Granger causality results show unidirectional causality from inflation to inflation volatility, output growth to output growth volatility, and inflation volatility to output growth. This indicates that both higher growth and higher inflation uncertainty are responsible for increasing growth uncertainty in Pakistan
Long Run Relationship between Energy Efficiency and Economic Growth in Pakistan: Time Series Data Analysis: Tahir Mahmood and Faiza Kanwal
Full text linkThis study explores the nature of relationship between energy efficiency, measured by energy intensity (energy consumption to GDP ratio) and the level of economic activity, measured by GDP in Pakistan during 1980-2016. This study also analyzes the relationship between sectoral shares and energy efficiency. We used Error Correction Model (ECM) for empirical analysis to tests the existence of a long-term relationship between the energy intensity and GDP while using this model to capture the Granger causality between variables. Results of Johansen\u27s co-integration show that causality exists at least in one direction. Results of ECM predict the existence of unidirectional causality from GDP to energy intensity. These findings support conservation hypothesis on the basis of unidirectional causality running from output to energy efficiency. It is further observed that energy intensity in Pakistan is expected to increase further in the light of growing shares of industrial and services sectors in the GDP
Strategic Behavior of European Low-Cost Airlines: A Review and Economic Analysis: Nisar Ahmad, Amjad Naveed and Thomas Kersig
Full text linkThe remarkable evolution of low-cost carriers (LCC’s) in Europe has been subject to intensive discussions in recent years. Approaching industry maturity has revealed strategic errors among many airlines and caused several markets to exit. Various carriers have ended up in hybrid positions while trying to differentiate in order to remain competitive. This paper occupies with the role of strategies in the airline industry and assesses the level of deviation from the original low-cost model amongst European LCC’s. Synthesizing existing research and literature provides evidence that LCC’s adapting full-service network carrier characteristics perform worse than strict low-cost adherers