DOI: https://doi.org/10.59321/BAUETJ.V4I1.28
AUTHOR(S)
Md. Jahedul Islam1*, Jasmin Akter2, Shampa Chakraborty3
ABSTRACT
Bangladesh’s economy is mainly sustained by some notable macroeconomic variables. This study examines the short-run dynamics as well as in the long-run relationship between some selected macroeconomic variables and economic growth in Bangladesh using time series econometric tools. The variables contemplated are exports, imports, foreign remittance inflows, exchange rate, external debt, and the industrial price index (As proxy of GDP). Monthly period of data from January 2010 to June 2022 has been considered during this time series analysis. All variables are found stationary at their first difference under the ADF stationary test. As a result, Johansen multivariate cointegration test has been applied. This cointegration test is affirmed that the GDP of Bangladesh and the selected macroeconomic variables are cointegrated which imparts a clear indication of long-run association. To analyze the practicable endogenous relationship between the said variables, Granger causality test is performed to help scrutinize whether macroeconomic variables are stimulating the GDP or not. It is found that there is bidirectional causality between GDP and export, external debt and GDP, and remittance and GDP. The government and the central banks’ insightful policies need to be improved more to keep macroeconomic variables up in the future.