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Issues in the measurement and construction of the consumer price index in Pakistan

2014 August 28
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The Consumer Price Index (CPI) is one of the most important measures used in economic analysis. The more common uses are: the indexation of wages, rents, contracts and social security payments; the deflation of household consumption in the national accounts; and as a general macroeconomic indicator, especially for inflation targeting and for setting interest rates. Elements of a CPI are also often used in the calculation of purchasing power parities (PPPs) required in the International Comparison Program (ICP) (UN, 2009). As such it also has very significant political implications when the performance of the governments is assessed in terms of real growth, inflation and poverty reduction.
This paper examines the measurement and construction of the Consumer Price Index in Pakistan. With the help of the data from Household Integrated Economic Surveys (HIES) of the Government of Pakistan, and the recently collected data of Rural Household Panel Survey under the Pakistan Strategy Support program, this paper examines identifies some serious issues in the measurement and construction of the CPI in Pakistan. Differences in the consumption patterns and prices faced by rural and urban households not explicitly accounted for in the CPI and the respective weights of different commodity groups used are highlighted as issues for serious concern.

Read more at PSSP Working Paper 020 "Issues in the measurement and construction of the consumer price index in Pakistan" 

How much do you love Pakistan?

2014 April 28
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by mhameed

PSSP Working Paper 018 "How much do you love Pakistan? A property tax revenue simulation for a municipal revolution in Punjab" conducted empirical policy research on property taxation with regard to fiscal revenue options and growth potential of cities. The study incorporates a legal and procedural review of the property tax system in Punjab and data collection primarily from one rural Tehsil of Punjab for the Urban Immovable Property Tax (UIPT) and the agricultural-land Local Rate tax. Key Informant Interviews were conducted to highlight the weaknesses in the local property tax systems arising from issues such as inter-governmental fiscal relations; classification, valuation and assessment mechanisms; political factors; compliance culture; tax administration functions, especially record-keeping; and exemptions and preferential treatments. Finally, simulations were undertaken to show the potential revenue increase from a variety of urban and rural property tax policy options. Results show substantial potential gains in tax revenue from extending the UIPT to built-up village Lal Lakeer Localities and other policy options.

An assessment of industrial employment skill gaps among university graduates in the Gujrat-Sialkot-Gujranwala industrial cluster, Pakistan

2014 April 25
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PSSP Working Paper 17 "An assessment of industrial employment skill gaps among university graduates in the Gujrat-Sialkot-Gujranwala industrial cluster, Pakistan" looks at different assessments of employers and students regarding job skills. These lead to prominent gaps, defined by the authors as skill, employability, and perception gaps. The study is based on surveys of 100 industrial employers and 151 final year students from 6 universities and postgraduate colleges in the Gujrat-Sialkot-Gujranwala industrial cluster. Factor analysis grouped 24 specific skills into the three interpretable categories: communication and business specific skills, core employability skills, and professional skills. The results suggest gaps in all three respects for each of the skill categories. Close coordination among all stakeholders through internship programs for students, development and timely revision of market oriented curricula, and special skill enhancement training programs are recommended steps to enhance productive youth employment in Pakistan.

Competitive Grants Program Launches Third Call for Applications

2014 February 7
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Competitive Grants Program

Third Round of Grant Selections


Call for Round 3 Applications

Proposals due 31 March 2014

(Call for Applications circulated 1 February 2014)


 Research to Support the Enhanced Economic Growth of Pakistan

The Pakistan Strategy Support Program (PSSP) in conjunction with the federal Planning Commission is pleased to announce its third Call for Applications for research to enhance the economic growth of Pakistan. For Pakistan to achieve prosperity requires sustained and inclusive high growth. The Competitive Grants Program (CGP) is designed to support economic and other social science research that will inform the strategy of the Planning Commission for achieving its growth objectives. Fostering innovation within the academic and policy-oriented research communities of Pakistan is vital to the growth strategy.


The Competitive Grants Program is guided by a Research Advisory Committee (RAC) comprised of senior Pakistani and international development scholars. The 2014-15 Chairman of the RAC is Prof. Ahsan Iqbal, Minister of Planning, Development and Reforms and Deputy Chairman of the Planning Commission. Under its first two round of competition, the CGP has supported nearly forty research projects. Information on these previous rounds is available at


Analyses of Selected Heavy Metals and Aflotoxin M1 in Milk for Human Consumption in Jhang City, Pakistan

2014 January 7
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Traditional milk shops PSSP Working Paper 012 “Analyses of Selected Heavy Metals and Aflatoxin M1 in Milk for Human Consumption in Jhang City, Pakistan" investigates chemical contaminants in milk which affect public health and can constrain exports under sanitary and phyto-sanitary agreements. To investigate this, a screening survey was conducted during 2012-2013 to determine concentrations of Copper, Lead, Cadmium, Chromium, and Aflatoxin M1 in unprocessed, non-branded liquid milk available at conventional milk shops in Jhang city of Punjab and, for comparison, from small farms located near wastewater drains in peri-urban areas of the city. Findings show median concentrations of heavy metals being significantly higher than the standards of the International Dairy Federation and levels in a very high percentage of the samples exceeded these standards, however, there was no permissible level available for Chromium to make a comparable analysis. The AFM1 levels in 17% of samples were higher than the maximum tolerance limit set by the United States. The authors argue that these findings warrant continuous monitoring of those contaminants and a policy for their control. The levels of AFM1 in samples indicate that feed for animals was contaminated with aflatoxin B1- the precursor of AFM1 and they recommend surveillance of aflatoxin B1 in commercial concentrate feeds and industrial waste management. More generally, the sampling methodology adopted in this study can be a template for executing similar surveys is urban areas of developing countries (and informal markets) where a sampling frame of shops is not available.

Collection and Marketing of High Value Medicinal and Aromatic Plants from District Swat, Pakistan

2013 December 16
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Medicinal Plants - Swat

PSSP Working Paper 011: Collection and Marketing of High Value Medicinal and Aromatic Plants from District Swat, Pakistan by Dr. Hassan Sher presents an analysis of existing practices in collecting and trading high value medicinal and aromatic plants (MAPs) from District Swat, Pakistan. Local collectors/farmers and dealers were surveyed about their efforts, quantities collected, prices received and resulting incomes. Herbal markets in major cities of Pakistan were surveyed for current market trends, sources of material, imports and exports of herbal material, price patterns, and market product-quality requirements. The study notes that wild collection is almost the only source of medicinal plant raw material, with virtually no cultivation. Nomadic tribesman and local farmers involved in collecting MAPs are largely untrained regarding the pre-harvest and post-harvest treatment of collected materials, they lack marketing skills and access to larger markets, and are often unaware of the high prices their products earn at final sale. The trade pattern of MAPs is complex and heterogeneous, involving many players. The market share for District Swat has been declining. Reasons for the decline were identified as unreliable and often poor quality of the material supplied, length of the supply chain, and poor marketing strategies. This study posits that these problems can be addressed by improving the knowledge of those at the start of the supply chain, improving linkages among all steps in the chain, and developing sustainable harvesting practices.

Tax Farming Redux: Experimental Evidence on Incentive Pay for Tax Collectors by Dr. Asim Khwaja

2013 December 16
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by mhameed



Tax Farming Redux: Experimental Evidence on Incentive Pay for Tax Collectors


A discussion with

Asim Khwaja

Sumitomo-Foundation for Advanced Studies on International Development Professor of International Finance and Development,
Harvard Kennedy School

Thursday, 19 December 2013
12:00pm – 1:15pm


7AB Conference Room
International Food Policy Research Institute
2033 K Street, NW, Washington, DC 20006-1002 USA


CGP Round 2 Award Summaries and Radio Programs

2013 July 18
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In summer 2013, the Competitive Grants Program entered an exciting second stage. Interim reports have been received from the first round awardees; they have been externally reviewed under RAC coordination, and the reviews have been returned to grant awardees for development of their final project reports. Second round projects are well under way and the Competitive Grants Program is already seeing some promising results from the research done.  The second round awardees will submit interim reports on their projects this fall.

Round 2 awards

After an extensive proposal and review process of project applicants, the Competitive Grants Program within the PSSP held its second awards ceremony in April 19, 2013. The ceremony was held at the Marriott in Islamabad and was well attended by PSSP leadership, Pakistani officials, award recipients, and many other honored guests. At the ceremony, 20 applicants were awarded grants to conduct policy research on important topics concerning Pakistan’s economic development.

Grants underway cover a wide range of policy issues including three projects on entrepreneurship, four projects on agricultural markets and policy, four regarding governance policies, five regarding markets trade and growth, and three grants awarded to projects proposed by Pakistani researchers currently studying or based internationally.

Please find the link below to a description of the research projects receiving awards:

CGP round 2 project summaries

The Competitive Grants Program is excited about these new research projects and looks forward to working with the awardees to achieve their goals.

Radio programs

Radio talk shows were aired in May of 2013 highlighting some of the important research which these grants are funding. These radio programs were organized in collaboration with FM 101 and USAID. A portion of Round 2 awardees were featured, coming on the program to discuss their research and stir debate about the policy areas where they are working. Please find the link below to the full radio broadcast.

CGP radio broadcast 


(This post was authored by Mr. Andrew Comstack)

PSSP Management Team Discusses Program Highlights with Key Stakeholders in Lahore, Pakistan

2013 May 30
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by mhameed

On May 23, 2013, Pakistan Strategy Support Program (PSSP)'s Management Team, Dr. Stephen Davies, Program Leader for PSSP, Dr. Sohail Malik, Chairman of Innovative Development Strategies (IDS) and Dr. Paul Dorosh, Division Director for International Food Policy Research Institute,  met with key government and academic stakeholders in Lahore, Pakistan and presented them with highlights of PSSP's activities from the past few years. They also discussed possibilities for collaboration with the Economic Advisor to the incoming Pakistan Government, Sartaj Aziz;  Punjab Government, including Secretaries of Finance, Agriculture, Health, and Industries; Punjab Agricultural Research Board (PARB) and other private and academic stakeholders. Please find below the PSSP Management Team's presentation.

The attached presentation can also be downloaded here.

Pakistan Strategy Support Program Overview by Dr. Stephen Davies, Dr. Sohail Malik and Dr. Paul Dorosh from International Food Policy Research Institute

PSSP Training on Poverty and Distributional Indicators and Micro-Simulations Linked to CGE Modeling

2013 May 9
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by mhameed

For the past few weeks, researchers from various government, academic and research organizations have been meeting in PSSP's office in Islamabad, Pakistan to be trained in poverty and distributional indicators and micro-simulations linked to CGE modeling. Dr. Dario Debowicz, Dr. Sherman Robinson, Syed Hamza Haider and Angga Pradesha from IFPRI have been running the training which spans over six meetings. The same participants were trained last year in CGE modeling and that resulted in three studies analyzing in a general equilibrium framework three different issues pertinent to Pakistan: the exchange rate misalignment, the energy crisis, and the agricultural income tax policy. This current training hopes to generate an additional appendix on micro-simulations in each of these three studies.


The training includes the following components:

  • Poverty and distributional indicators, with explanation of the indicators and illustrations.
  • Hands-on practice
  • Linking CGE and micro-simulations models: typology, domain of applicability and examples
  • Getting changes in poverty and distributional indicators at household level in GAMS for an illustrative case (Productivity growth simulations for Pakistan, linking with Pakistan’s Household Income and Expenditure Survey (HIES) 2011)
  • Hands-on practice: extending the previously done CGE analysis to microsimulate distributional indicators at household level
  • Generation of short self-contained papers by the groups extending the already-done analysis in a general equilibrium framework
For lectures and training materials, please click here.