An Implication of Impulse Response Function in the Perspective of Green Revolution, Credit Disbursement, and Fossil Fuel Utilization in Pakistan

Abstract

Recently, credit disbursement and fossil fuel utilization increased to enhance wheat production so peasants could benefit from the green revolution. To look at the impact of credit disbursement, fossil fuel utilization, and the determinants of the green revolution were arranged to investigate the association among them. For this purpose, the study employed the time series in the perspective of Pakistan, spanning 1971 to 2019. Modern econometrics techniques like Johansen cointegration, vector autoregressive and impulse response function were employed along with a number of diagnostics tests. Evidence of the Johansen model shows significant long-run cointegration among the green revolution, credit disbursement, fossil fuel, and total wheat production. The Johansen test elaborates that 1% increase in credit disbursement and fossil fuel increases the total wheat production by 0.57% and 0.04 % respectively. Moreover, the determinants of the green revolution also positively affect wheat production. While the coefficient, residual and stability diagnostic tests are in favor of the study. The findings of the impulse response function state that all the concerned variables positively affect the total wheat production in the coming years. The study suggested that the government and private sector should invest in research and development to introduce the organic chemical and forming to avoid soil fertility and environmental degradation.