Fully Modified Least Squares Modeling Of Wheat Crop Production

Abstract

This paper investigates the dynamic relationships between area and production of the wheat crop during 1989-90 to 2020-2021 in different districts of Gujarat state, India. Pedroni cointegration test reveals the long-run equilibrium relationships between area and production of wheat, and the pairwise Granger causality test ensures cointegration relationships. Furthermore, the estimated long-run Panel Fully Modified Least Squares model was highly significant, which explains the 86 % of variations in wheat production. Furthermore, the long-term coefficient is positive and highly significant, indicating the existence of positive long-run equilibrium relationships between the study variables.

JEL classification numbers: E18, HO, I1, J64, J88.
Keywords: Cross-sectional dependence test, Panel cointegration test, Fully Modified Least Squares, Granger causality test, Levin-Lin-Chu unit root test.