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The Agricultural and the External (Net Barter) Terms of Trade in Bangladesh: Trends, Movements and Relationships, 1952-2006

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  • Hossain, Akhand Akhtar

Abstract

This paper analyses the trends and movements of, and the relationship between, the agricultural and the external (net barter) terms of trade in Bangladesh for the period 1952-2006. The Pesaran bounds testing results suggest the presence of a cointegral relationship between the agricultural and the external terms of trade in Bangladesh. The forecasting ability of the error-correction model of the agricultural terms of trade is highly, satisfactory, irrespective of whether the level or the percentage change in the agricultural terms of trade is being forecasted. The overall results suggest that the agricultural terms of trade in Bangladesh is determined endogenously and does not seem to have been deployed by policy makers to ‘squeeze agriculture’ within an import-substituting strategy of development that has effectively ended in this country since the mid-1980s.

Suggested Citation

  • Hossain, Akhand Akhtar, 2008. "The Agricultural and the External (Net Barter) Terms of Trade in Bangladesh: Trends, Movements and Relationships, 1952-2006," Review of Applied Economics, Review of Applied Economics, vol. 4(1-2).
  • Handle: RePEc:ags:reapec:50011
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    References listed on IDEAS

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    1. Ronald Soligo, 1967. "Monetary Problems of Pakistan," Journal of Political Economy, University of Chicago Press, vol. 75, pages 635-635.
    2. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    3. Pesaran, M. Hashem & Shin, Yongcheol, 1996. "Cointegration and speed of convergence to equilibrium," Journal of Econometrics, Elsevier, vol. 71(1-2), pages 117-143.
    4. Kwiatkowski, Denis & Phillips, Peter C. B. & Schmidt, Peter & Shin, Yongcheol, 1992. "Testing the null hypothesis of stationarity against the alternative of a unit root : How sure are we that economic time series have a unit root?," Journal of Econometrics, Elsevier, vol. 54(1-3), pages 159-178.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    6. Stephen R. Lewis, Jr. & S. Mushtaq Hussain, 1966. "Relative Price Changes and Industrialization in Pakistan 1951 - 1964," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 6(3), pages 408-431.
    7. Akhand Akhtar Hossain, 2008. "Responses of Agricultural Prices, Industrial Prices and the Agricultural Terms of Trade to Money Supply Shocks in Bangladesh, 1973M1-2006M6," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 43(1), pages 287-314, December.
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    More about this item

    Keywords

    agriculture; terms-of-trade; cointegration; International Relations/Trade; C22; O24; Q11;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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