The Real Exchange Rate, Production Structure, and Trade balance: The Case of Bangladesh

Akhand Hossain ()

Indian Economic Review, 1997, vol. 32, issue 2, 155-177

Abstract: This paper develops a macroeconomic model with tradable and nontradable goods and then analyses the movement of both the real exchange rate and trade balance in Bangladesh for the period 1973-1996. Statistical data show that a sustained economic growth of about 4.5 per cent per annum since the mid-1970's and the continued inflows of foreign capital -foreign aid and overseas worker's remittances- have caused an appreciation of the real exchange rate by increasing the relative demand for non-tradables. The increase in the relative demand for non-tradables has brought about structural change in both output and employment in favour of the non-tradable goods sector. For the external sector of the economy, empirical results suggest that as the appreciated real exchange rate did not switch demand from nontradables to tradables because the demand for each of these goods appears price inelastic, the trade balance position, instead of deteriorating, has shown an improvement since the early 1990s.

JEL-codes: F32 O53 (search for similar items in EconPapers)
Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dse:indecr:v:32:y:1997:i:2:p:155-177

Ordering information: This journal article can be ordered from
http://www.ierdse.org/

Access Statistics for this article

Indian Economic Review is currently edited by Pami Dua (Editor) & Ram Singh (Associate Editor) and Sunil Kanwar

More articles in Indian Economic Review from Department of Economics, Delhi School of Economics University of Delhi, Delhi 110 007. Contact information at EDIRC.
Bibliographic data for series maintained by Pami Dua ().