A macroeconomic model of the Bangladesh economy and its policy implications

Neal C. Maroney, Kabir. Hassan, Syed A. Basher and İhsan Işık ()

Journal of Developing Areas, 2004, vol. 38, issue 1, 135-149

Abstract: This paper develops a macroeconometric model for the Bangladesh economy using nine key macroeconomic variables employing annual data from 1974 to 2000. The methodology employed in this paper uses unit root and Johansen's cointegration tests followed by vector error correction model and variance decomposition to examine the dynamic relationships among macroeconomic variables. Our results show that within the context of Bangladesh, monetary policy is more important than fiscal policy. As significant amount of development expenditure for Bangladesh comes from foreign donation, it is also argued that this aid must be channeled to productive activities so that it contributes to economic growth. The domestic export base has also to be widened and diversified.

Keywords: conintegration; vector error-correction model; macro model; developing countries (search for similar items in EconPapers)
JEL-codes: C32 E60 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.38:year:2004:issue1:pp:135-149

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