Output and Substitution Elasticities in Pakistan’s Industrial Sectors: Panel Data Analysis

Sidra Nazir, Nasir Mahmood () and Gulnaz Hameed ()

The Economics and Finance Letters, 2022, vol. 9, issue 2, 257-272

Abstract: This study performed a panel data analysis of Pakistan’s nine major sub-industries in the years 1980–2019. The primary objective was to conduct a disaggregate analysis of the substitution elasticity of inputs in the different industries, including textile, mining and currying, manufacturing, fuel extraction, electricity, gas, and water supply, using the translog production function. The study used the translog production function to estimate output and substitution elasticities for each sub-industry. Based on the results of the output elasticities, the study concluded that there were negative elasticities for the inputs oil, gas, and labor, except for capital, which had positive elasticity, causing increasing returns to scale for industries. The elasticity of substitution was greater than one and the value was positive, showing that costly energy inputs can and should be replaced with cheaper energy inputs in these industries. For instance, electricity can be replaced with gas, which is cheaper than electricity in Pakistan.

Keywords: Energy inputs; Industrial sector; Non-energy inputs; Output and substitution elasticities; Panel data; Translog production function. (search for similar items in EconPapers)
Date: 2022
References: Add references at CitEc
Citations:

Downloads: (external link)
https://archive.conscientiabeam.com/index.php/29/article/view/3180/7025 (application/pdf)
https://archive.conscientiabeam.com/index.php/29/article/view/3180/7037 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pkp:teafle:v:9:y:2022:i:2:p:257-272:id:3180

Access Statistics for this article

More articles in The Economics and Finance Letters from Conscientia Beam
Bibliographic data for series maintained by Dim Michael ().