Faculty of social studies department of economics supply response of tobacco output to price changes in

In this chapter the tobacco supply response model was constructed and work done by Leaver
(2004) was used as a framework for building the econometric model. Variables used were selected and justified according to the existing literature and data availability. In addition, the model diagnostic tests and the estimation procedures were briefly outlined. The succeeding chapter will focus on estimating the model, presenting and interpreting the results.
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CHAPTER FOUR
ESTIMATION, PRESENTATION AND INTERPRETATION OF RESULTS
4.0 Introduction
The chapter estimates and present results in tabular form for unit root, multicollinearity, autocorrelation, model misspecification and heteroskedasticity tests. The findings of the study will be interpreted in accordance to the underlying theories and previous work done in the field of agricultural supply response analysis.
4.1 Summary of Descriptive Statistics
Table 1: Summary of Descriptive Statistics
TTOUT
t
ATG
t
PT
t
MP
t
Mean
1.39E+08 19770.61 1.73 189.24
Median
1.31E+08 6147.50 1.74 135.50
Maximum
2.37E+08 106456.0 3.67 Minimum 1145.00 0.12 Std. Dev.
54033462 27740.61 1.11 110.62
Skewness
0.05 1.72
-0.03 0.87

Kurtosis
1.79 5.07 1.86 2.23
Jarque-Bera
2.19 24.21 1.89 Probability 0.000006 0.39 0.08
Sum
5.01E+09 711742.0 60.78 Sum Sq. Dev.
1.02E+17 E 41.83 Observations 36 36 Table 1 shows a summary of descriptive statistics for the data used in this study. The mean and standard deviation for total tobacco (TOUT
t
) indicate that on average 139 000 tonnes of tobacco
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were supplied to the market with an average yearly variation of 54 000 tonnes. Furthermore, the maximum, the minimum and the standard deviation for nominal average tobacco prices indicate that prices have been fluctuating around an average of US to US with an average yearly variation of approximately US$1.11.

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