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BDS Current Issue Volume XXX, September-December 2004, Number 3&4

Changes in Economic Status of Rural Households in Bangladesh: A Case Study of Two Villages

Author: M A Quasem

Financial Development-Economic Growth Nexus: A Case Study of Bangladesh

Author: Habibur Rahman

Revisiting Kuznets Hypothesis: An Analysis with Time Series and Panel Data

Author: Syed Munir Khasru and Muhammad Muaz Jalil

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Significant impact of economic growth on poverty alleviation is eroded by high income inequality. This article revisits Kuznets Hypothesis which suggested that inequality and growth have an inverted U shaped relationship. This article differs from previous articles on this subject, by being broader in scope although remaining exploratory in nature. The article uses log quadratic model and level quadratic model, autoregressive time series analysis and panel analysis, expands the database by covering a time period 1963-1999, and a comparative time-series analysis using the augmented D-S inequality dataset (EHII2.3) and UTIP-UNIDO dataset as proposed by James K. Galbraith and Hyunsub Kum

The Monetary Transmission Mechanism in Bangladesh: Bank Lending and Exchange Rate Channels

Author: Shamim Ahmed and Md. Ezazul Islam

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In view of changes in legal, institutional and policy frameworks in the financial system of Bangladesh under the Financial Sector Reform Program (FSRP) initiated in the early 1990s, the paper attempted to empirically investigate whether bank lending and exchange rate channels exist in the economy through which monetary policy changes can influence aggregate output and prices. An assessment of the empirical evidence has been established through the unrestricted vector autoregressions (VARs) approach using quarterly data for the period of July-September 1979 to April-June 2005. The results of the empirical analysis suggest weak existence of both bank lending and exchange rate channels in the Bangladesh economy for the full-sample period as well as in the sub-sample period (i.e., January-March 1990 to April-June 2005). These findings have important implications with respect to the operation of monetary policy. Specifically, knowing the distinct active channels of monetary transmission in the economy would guide the monetary authority in formulating and conducting monetary policy pursuant to its objectives under the current regime, i.e., floating exchange rate and market based monetary policy instruments

Changes in Policy Framework and Total Factor Productivity Growth in Bangladesh

Author: M K Mujeri

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The paper relates changes in the policy framework with growth of total factor productivity (TFP) in Bangladesh. The identified policy regimes provide the major ‘turning points’ in the country’s economic history. The analysis of the sources of growth uses the growth accounting framework to measure the relative contributions of labour and capital as well as that of TFP to GDP growth in Bangladesh over different policy regimes. The estimated TFP growth rates have been further analyzed to examine the impact of inflation, public consumption, real exchange rate (REER), and trade openness. The negative role of inflation is intuitive and makes the latter a prime focus of policy targeting, especially in recent times, when inflation has remained persistently high and rising. Both REER and trade openness turn out to be insignificant though with correct signs. Public consumption appears to be positively correlated with TFP growth, which may appear as counter-intuitive, but seen in the factual context of the country’s well-contained growth, high demand for such expenditure, and excess liquidity in the banking system, it can be easily interpreted.

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