Simultaneous estimation of demand and supply functions & production and consumption projection of corrugated board in Iran

Abstract

Corrugated board is considered as a valuable community for packaging at both international and domestic markets. Therefore for the development of corrugated board industry in Iran and to understand the variation in demand for this product, it's necessary to identify the consumption and production patterns as well as the most important and effective variables influencing it's status. Then the demand & supply for corrugated board can be forecasted. In this study, the dynamic econometric model has been used to demonstrate simultaneous relationship between supply and demand. Coefficients of the model were estimated using 3sls method with the time series data from 1981 to 2007. The results indicated that in the demand function, intercept, price, GNP in previous period, population, CPI, industrial added value(Iav), production index of large-scale industries(PILSI) and the war dummy variables are significant at 0.05 level. In the supply function, intercept, production quantity in previous period, inflation rate, corrugated board price-raw material price ratio in previous period, import quantity in previous period, cost price all in previous period and subsidy dummy variables are significant at 0.05 level. Results indicate that the mentioned variables influence consumption and production, simultaneously. The results of projection also demonstrate that corrugated board production & consumption will increase into 2012.

Keywords

• Simultaneous
• corrugated board
• supply
• demand
• projection
• Iran