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Economic Structure and Macroeconomic Uncertainty: Policy Implications for Bangladesh

Author

Listed:
  • Bernhard G. Gunter

    (American University and Bangladesh Development Research Center (BDRC))

  • Faisal Ahmed

    (International Monetary Fund (IMF))

  • A. F. M. Ataur Rahman

    (North South University)

  • Jesmin Rahman

    (International Monetary Fund (IMF))

Abstract

This paper begins with examining Bangladesh’s economic structural transformation during 1980-2010, which is compared and contrasted with the transformation of India and Pakistan. It then calculates and compares the three countries’ macroeconomic volatility and uncertainty for the observation period (1980-2010), using unbiased volatility and uncertainty measures. It also reviews the evolution of Bangladesh’s macroeconomic uncertainty for each decade (i.e., the 1980s, 1990s and the 2000s). It shows, for example, that Bangladesh’s GDP volatility and uncertainty have been increasing over time. Reflecting on the fact that macroeconomic uncertainty has a negative impact on investment and growth, the paper derives various policy implications for Bangladesh, highlighting the importance of economic diversification, countercyclical monetary policy, smoothing external factors, and building up reserves and buffers.

Suggested Citation

  • Bernhard G. Gunter & Faisal Ahmed & A. F. M. Ataur Rahman & Jesmin Rahman, 2014. "Economic Structure and Macroeconomic Uncertainty: Policy Implications for Bangladesh," Bangladesh Development Research Working Paper Series (BDRWPS) BDRWPS No. 20, Bangladesh Development Research Center (BDRC).
    • Handle: RePEc:bnr:wpaper:20
    as

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    File URL: http://www.bangladeshstudies.org/files/WPS_no20.pdf
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    References listed on IDEAS

    as
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    3. World Bank, 2012. "World Development Indicators 2012," World Bank Publications - Books, The World Bank Group, number 6014, December.
    4. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    structural change; volatility; uncertainty; Bangladesh; India; Pakistan;
    All these keywords.

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