Dynamics of foreign earnings, assistance and debt servicing in Bangladesh
AbstractPurpose – The purpose of this paper is to examine the dynamics between real gross domestic product (GDP), foreign earnings, development assistance and debt servicing in Bangladesh, 1973-2008, with the incorporation of a structural break after 1990. Design/methodology/approach – A vector autoregression (VAR) framework using annual data from 1973-2008 was used to examine the dynamics among the above mentioned variables, with the incorporation of a structural break after 1990. This was followed by innovation accounting and testing for Granger causality. Findings – It was found that the structural break is significant and all the macro-variables exhibit trend stationarity. Innovation accounting suggests that the debt servicing capacity of Bangladesh is enhanced by an improvement in foreign earnings, an outcome which is reinforced by Granger causality tests. Research limitations/implications – A bigger sample size, consisting of quarterly observations is desirable. Practical implications – These results suggest that an increase in foreign earnings implies an improvement in the capacity to service overseas debt. Thus, from a policy perspective, it is recommended that steps be taken to diversify the sources of foreign earnings. The analysis affirms that there is a causal link between injections, represented by foreign earnings and overseas development assistance and leakages, represented by debt servicing. Such affirmation is certain to be an important input in macroeconomic policy formulation. Originality/value – The dynamics between real GDP, foreign earnings, development assistance and debt servicing in Bangladesh have been empirically examined using recent developments in time-series econometrics.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Emerald Group Publishing in its journal International Journal of Development Issues.
Volume (Year): 11 (2012)
Issue (Month): 1 (April)
Contact details of provider:
Web page: http://www.emeraldinsight.com
Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Hansen, Henrik & Tarp, Finn, 2001. "Aid and growth regressions," Journal of Development Economics, Elsevier, vol. 64(2), pages 547-570, April.
- Blanchard, Olivier Jean & Quah, Danny, 1989.
"The Dynamic Effects of Aggregate Demand and Supply Disturbances,"
American Economic Review,
American Economic Association, vol. 79(4), pages 655-73, September.
- Tom Doan, . "BQDODRAWS: RATS procedure to implement Monte Carlo draws from a VAR with Blanchard-Quah factorization," Statistical Software Components RTS00030, Boston College Department of Economics.
- Olivier Jean Blanchard & Danny Quah, 1988. "The Dynamic Effects of Aggregate Demand and Supply Disturbance," Working papers 497, Massachusetts Institute of Technology (MIT), Department of Economics.
- Olivier Jean Blanchard & Danny Quah, 1990. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," NBER Working Papers 2737, National Bureau of Economic Research, Inc.
- Tom Doan, . "RATS programs to replicate Blanchard and Quah AER 1989," Statistical Software Components RTZ00017, Boston College Department of Economics.
- Claessens, Stijn, 1990. "The debt laffer curve: Some estimates," World Development, Elsevier, vol. 18(12), pages 1671-1677, December.
- C-J. Dalgaard & H. Hansen, 2001. "On Aid, Growth and Good Policies," Journal of Development Studies, Taylor & Francis Journals, vol. 37(6), pages 17-41.
- Oks, Daniel & van Wijnbergen, Sweder, 1994.
"Mexico after the debt crisis : is growth sustainable?,"
Policy Research Working Paper Series
1378, The World Bank.
- Oks, Daniel & van Wijnbergen, Sweder, 1995. "Mexico after the debt crisis: is growth sustainable?," Journal of Development Economics, Elsevier, vol. 47(1), pages 155-178, June.
- Patrick GUILLAUMONT & Lisa CHAUVET, 1999.
"Aid and Performance: A Reassessment,"
- Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
- Debapriya Bhattacharya & Toufic A Chowdhury, 2003. "Financial Sector Reforms in Bangladesh: The Next Round," CPD Working Paper 22, Centre for Policy Dialogue (CPD).
- Pesaran, H. Hashem & Shin, Yongcheol, 1998.
"Generalized impulse response analysis in linear multivariate models,"
Elsevier, vol. 58(1), pages 17-29, January.
- Pesaran, M. H. & Shin, Y., 1997. "Generalised Impulse Response Analysis in Linear Multivariate Models," Cambridge Working Papers in Economics 9710, Faculty of Economics, University of Cambridge.
- Love, Jim & Chandra, Ramesh, 2005. "Testing export-led growth in Bangladesh in a multivarate VAR framework," Journal of Asian Economics, Elsevier, vol. 15(6), pages 1155-1168, January.
- Henrik Hansen & Finn Tarp, 2000. "Aid effectiveness disputed," Journal of International Development, John Wiley & Sons, Ltd., vol. 12(3), pages 375-398.
- Biru Paksha Paul, 2010. "Does corruption foster growth in Bangladesh?," International Journal of Development Issues, Emerald Group Publishing, vol. 9(3), pages 246-262, July.
- Cohen, Daniel, 1997.
"Growth and external debt: a new perspective on the african and latin american tragedies,"
CEPREMAP Working Papers (Couverture Orange)
- Cohen, Daniel, 1997. "Growth and External Debt: A New Perspective on the African and Latin American Tragedies," CEPR Discussion Papers 1753, C.E.P.R. Discussion Papers.
- Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
- Paul, Biru Paksha & Uddin, Gazi Salah, 2011. "Energy and output dynamics in Bangladesh," Energy Economics, Elsevier, vol. 33(3), pages 480-487, May.
- K. A. Al Mamun & H. K. Nath, 2005. "Export-led growth in Bangladesh: a time series analysis," Applied Economics Letters, Taylor & Francis Journals, vol. 12(6), pages 361-364.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jade Turvey).
If references are entirely missing, you can add them using this form.