Estimation of Export Demand Functions for Iran’s Pistachio

This paper estimates the major determinants of Pistachio export demand and investigates the elasticity’s of demand for Pistachio export in Iran. This study uses annual time series data (1970-2008) and unit root tests and analyzes them using Auto Regressive Distributed Lag (ARDL) model21. This co-integration technique accommodates potential structural breaks that could undermine the existence of a long-run and significant relationship between Pistachio export demand and its main determinants. Error correction coefficient is negative and small and is equal to – 0.54 and it shows that if there is any shock or imbalance in total production, the system will be back to stability after a 3-year period. Together the independent variables explained 91% of the variance in the dependent variables. The remaining 9% was due to unidentified variables. In relation to that, we can conclude that explanatory power is high for the equation.