Economics at your fingertips  

Does the central bank contribute to the political monetary cycles in Bangladesh?

Mohammad Abdul Munim Joarder, A. K. M. Nurul Hossain and Monir Ahmed

Economic Change and Restructuring, 2016, vol. 49, issue 4, No 2, 365-394

Abstract: Abstract This study aims to explore the impact of elections on the inflationary process in Bangladesh i.e., to observe whether elections have any influence on monetary variables like money supply, exchanges rate and thus inflation. We used quarterly data as the incumbent in Bangladesh must give a maximum of 3 months’ time to the caretaker government to accomplish the election. Our full ARDL estimation suggested that an appreciation of the exchange rate just before the election reduced inflation significantly and an effective way of incumbent’s to gain popularity. We found that current inflation was positively associated (though not significantly) with the previous quarter’s money supply measured by M1. The incumbent took policies to reduce the inflation during election period as voters place more importance in the recent history. We find evidence of political monetary cycles in Bangladesh. Bangladesh Bank’s independence should be given priority so that it can withstand political pressure to stimulate the economy before elections or finance election-related increases in government spending.

Keywords: Political monetary cycles; Central bank independence; ARDL bounds testing; Bangladesh (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1007/s10644-015-9179-1

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

Page updated 2024-07-01
Handle: RePEc:kap:ecopln:v:49:y:2016:i:4:d:10.1007_s10644-015-9179-1