The Macroeconomic Determinants of Economic Growth in Bangladesh: An ARDL Approach

Md. Monir Khan, Sunita Rani Das and Asif Ahmed
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Md. Monir Khan: Assistant Director, Monetary Policy Department, Bangladesh Bank, Dhaka-1000, Bangladesh
Sunita Rani Das: Assistant Director, Monetary Policy Department, Bangladesh Bank, Dhaka-1000, Bangladesh
Asif Ahmed: Assistant Director, Monetary Policy Department, Bangladesh Bank, Dhaka-1000, Bangladesh

International Journal of Research and Innovation in Social Science, 2024, vol. 8, issue 6, 1433-1445

Abstract: The study aims to explore the impact of major macroeconomic variables (Capital, Government Expenditure, Net Trade and Domestic Credit) on Gross Domestic Products (GDP) of Bangladesh. In this study we have employed Autoregressive Distributive Lag (ARDL) mode to the short run as well as long run relationship between major macroeconomic variables and GDP of Bangladesh. The findings of the study is that in the short run capital and domestic credit have showed negative relationship at lag 1, while the remaining variables have showed positive relationship with GDP. However, the error correction mechanism shows that disequilibrium in the short run converges to equilibrium at a rate of 34%. Capital, Government Expenditure, Net Trade and Domestic Credit all are positively associated with GDP in the long run. Gross capital formation and government expenditure have strong positive effects on GDP of Bangladesh.

Date: 2024
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