This paper provides new evidence on the money demand function for Bangladesh using cointegration techniques and a longer quarterly time series data than previously used. Cointegration results indicate that a single co-integrating vector describes the long-run equilibrium money demand relationship in Bangladesh for both the narrow and broad money categories. It is also found that the money demand function is stable and is highly dominated by the transaction motive for holding money. The effects of alternative opportunity cost variables on money demand were not found to be significant. The short-run money demand function was found to be stable and the speed of adjustment to the long-run equilibrium was found to be reasonable for both money categories. The empirical results may have significant implications for monetary policy of the country.

This paper constructs two simple asymmetric information models to analyze the effects of bureaucratic corruption on entry conditions and output in an industry. In the first model, the bureaucrat controls a direct mechanism of entry deterrence like industrial license, and can unilaterally set the bribe rate. The bribe maximization by the bureaucrat implies output restriction in the industry compared to a monopoly if there is heterogeneity of costs among the firms. In the second model, there is no explicit entry deterring mechanism available to the bureaucrat. Here we analyze the conjecture that bribe may be the outcome of collusion between the bureaucrat and the incumbents which deters entry by raising the costs of doing business. If there is cost heterogeneity, collusive entry deterring equilibrium exists under certain parameter restrictions. There does not exist a subgame perfect collusive equilibrium where bribe alone can deter entry in the case of homogenous costs.

The paper is an attempt to analyse development of primary education in Bangladesh in the 1990s. It studies different state, school and programme-based interventions undertaken in the country to make an ‘effective school’. On the basis of school, household and pupil-based cross-section data, empirical research shows that a set of basic inputs such as supply of instruction materials, adequate contact hours, a good mix of teaching practices, well-trained and motivated teachers is necessary to make the school effective. It is observed that the teachers in the non-State schools and NGO sector with lower salary levels are performing better. Therefore, further encouragement of non-State primary schools with more community participation may be an innovation in the right direction

The empirical studies in the context of Bangladesh provide contradictory evidence regarding the relationship between domestic saving and foreign aid. The present article examines the domestic saving-foreign aid relationship using the co-integration and error-correction modelling strategies to tackle the problem of non-stationary data, which the earlier studies overlooked. Three different co-integration techniques have been used and in every case a valid long-run inverse relationship between saving and aid is observed. The short-rum error-correction models have also confirmed the negative relationship between these two variables. The Granger Causality test identifies a long-run causal relationship running from foreign aid to saving while in the short-run a bi-directional causality is found. This paper finds that the negative relationship between saving and aid is quite ‘robust’ and not sensitive to the choice of variables in the saving function.