A Study of the Factors Determining the Balance of Thai Natural Rubber Exports using a Simultaneous Equations Model
Keywords:
demand, supply, simultaneous equation model, Two-Stage Least SquareAbstract
This study aims to analyze the factors affecting supply and demand in the context of exports of natural rubber from Thailand and the market equilibrium concerning natural rubber in Thailand, based on information regarding secondary market equilibrium in a simultaneous equation model. The relationship of the various constituents and variables within each equation are often related. Therefore, the estimated coefficients are derived using a two-stage least square paradigm. The results of the analysis of factors affecting supply and demand can be explained by changes incurred when external variables alter. The analysis of simultaneous model equations reveals changes in equilibrium quantity or price due to external variable fluctuations. The study found that the factors that explain the price of rubber can be drawn mostly from the demand rather than the supply side. The average income per capita of the country's largest natural rubber importers, the production of vehicles in the world and crude oil can all affect change in the import demand for natural rubber. The aggregate production of vehicles worldwide can also explain changes in the equilibrium price of rubber. Meanwhile, the study uncovered that the important factors explaining variations in the supply of natural rubber for exports are the price of natural rubber, natural rubber plantations and the price of palm oil. However, average rainfall variations do not significantly affect changes in the supply of natural rubber.
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