University of zimbabwe faculty of social studies department of economics

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Table of Contents

Abstract ............................................................................................................................................ i Table of Contents ............................................................................................................................ ii List of tables ................................................................................................................................... iv List of figures ................................................................................................................................. iv List of Acronyms ............................................................................................................................ v CHAPTER ONE ............................................................................................................................. 1 INTRODUCTION AND BACKGROUND ................................................................................... 1 1.0 Introduction ....................................................................................................................... 1 1.2 Problem Statement ........................................................................................................... 4 1.4 Research Objectives ........................................................................................................ 5 1.5 Research Hypothesis. 5 1.6 Significance of the Study ................................................................................................. 5 1.7 Organisation of the Rest of the Study .............................................................................. 5 CHAPTER TWO ............................................................................................................................ 6 LITERATURE REVIEW ............................................................................................................... 6 2.0 Introduction ....................................................................................................................... 6 2.1 Theoretical Literature ........................................................................................................ 6 2.1.1 Basic Theory of Supply and Supply Response ............................................................... 6 2.1.2 The Nerlove (1958) Theory of Supply Response ........................................................... 6 2.1.3 The Cobweb Theorem .................................................................................................... 7 2.2 Empirical Literature ........................................................................................................... 8 2.3 Conclusion ....................................................................................................................... 10

iii CHAPTER THREE ...................................................................................................................... 11 METHODOLOGY ....................................................................................................................... 11 3.0 Introduction ..................................................................................................................... 11 3.1 The Model Specification ................................................................................................. 11 3.1.1 The Theoretical Model ................................................................................................. 11 3.1.2 The Empirical Model .................................................................................................... 11 3.2. Definition and Justification of Variables ........................................................................ 12 3.3 Estimation procedure ....................................................................................................... 14 3.4 Unit root tests. 15 3.5 Model Diagnostic Tests ................................................................................................... 15 3.6 Data sources, Type and Period ........................................................................................ 16 3.7 Conclusion ....................................................................................................................... 16 CHAPTER FOUR ......................................................................................................................... 17 ESTIMATION, PRESENTATION AND INTERPRETATION OF RESULTS ......................... 17 4.0 Introduction ..................................................................................................................... 17 4.1 Summary of Descriptive Statistics .................................................................................. 17 4.2 Unit Root Test Results ..................................................................................................... 18 4.5 Conclusion ....................................................................................................................... 22 CHAPTER FIVE .......................................................................................................................... 23 SUMMARY, CONCLUSION AND POLICY RECOMMENDATIONS ................................... 23 5.0 Introduction ..................................................................................................................... 23 5.1 Summary and Conclusion ................................................................................................ 23 5.2 Policy recommendations. 23 5.3 Areas for further studies .................................................................................................. 24

iv REFERENCES ............................................................................................................................. 25 APPENDICES .............................................................................................................................. 27

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