| The objective of this study is to measure the impact of P.L. 480 exports of wheat on the recipient country's wheat price, wheat production, and wheat consumption. An attempt is made to quantify the immediate impact, delayed impact and the long-run impact of concessional sales under P.L. 480 on the country that receives the product.;Ordinary least square estimation procedure was used for the area and yield equations and two-stage least square method for the commercial imports, per capita demand, and income generation equations.;The structural form results were used to derive the reduced form of the model. The "final" method of simulation was used to evaluate the predictive ability of the model. Impact, delay, and cumulative multipliers were then computed from the reduced form to measure the impact of P.L. 480 wheat imports.;This study concludes that there is some long-run detrimental effect of P.L. 480 wheat imports on wheat production in India, but that such effect is over-shadowed by the net increase in quantity of wheat available to the consumers. Over the study period, a 1,000 ton increase in P.L. 480 imports is associated with decreased domestic production of 73.8 ton, and net increased consumption of 926.2 tons.;The econometric model used in this study contains four blocks of functional relationships: supply, demand, income generation and commercial imports. Separate equations are used for area and yield functions so that systematic changes in these variables are accounted for. On the demand side this study uses a single demand equation for wheat because it is believed that it is not only adequate but is better than a multi-equation demand function in identifying the role of wheat distributed through the fair-price shops in India. The demand equation contains adjusted disposable income as an explanatory variable by adjusting the disposable income by deflating it by the price ratio of wheat at the two outlets. The model uses eleven endogenous variables and fifteen predetermined variables. |
