THE AGRICULTURAL TERMS OF TRADE IN BANGLADESH: AN ECONOMETRIC ANALYSIS OF TRENDS AND MOVEMENTS, 1952-2006

Akhand Akhtar Hossain

Australian Economic Papers, 2008, vol. 47, issue 1, pages 38-52

Abstract: This paper investigates the trends and movements of agricultural prices, industrial prices and the agricultural terms of trade in Bangladesh with annual data for the period 1952-2006. The ADF and KPSS tests results suggest that both agricultural and industrial prices have a unit root while the agricultural terms of trade is trend-stationary. These results remain unchanged if allowance is made in the unit root test for the possibility of a structural break during 1971-1975 (when Bangladesh gained independence from Pakistan and experienced economic shocks) by applying the two-step procedure of Perron (1989). A simple Nerlovian agricultural price determination model is specified within the framework of aggregate demand and aggregate supply. The Johansen cointegration test results for the periods 1953-2006 and 1973-2006 suggest that there exists a cointegral relationship between agricultural prices, industrial prices, per-capita real income and the real exchange rate between the Bangladeshi taka and the US dollar under the restriction that per-capita real income and the real exchange rate are 'long-run forcing variables' in the sense of Pesaran and Shin (1995), and Pesaran, Shin and Smith (1996). The paper estimates a four-variable vector error-correction (VEC) model and conducts an impulse response analysis for the post-independence period, 1973-2006. Copyright 2008 The Author.

Downloads: (external link)
http://www.blackwell ... .00328.x/enhancedabs link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0004-900X

Access Statistics for this article

Australian Economic Papers is edited by Daniel Leonard

More articles in Australian Economic Papers from Blackwell Publishing
Series data maintained by Christopher F. Baum ().