Bangladesh Economy Beyond Hartal: An Econometric Analysis on the Temporal Behavior

Abstract: 

In this paper the principal purpose has been made to find out the impact of hartals and blockades with other macroeconomic variables namely: electricity consumption, trade openness, domestic investment, long-term external debt, and government spending on economic growth using modern econometric techniques based on time series data of the period between 1972 and 2014. From the estimated results of VEC model, short-run unidirectional causalities have been found from electricity consumption, domestic investment, trade openness, government spending and hartals to economic growth, from external debt to electricity consumption, from government spending to domestic investment, from hartal to trade openness, from economic growth, trade openness and government spending to external debt, from electricity consumption, trade openness, and hartals to government spending, and short-run bidirectional causalities are found between trade openness and domestic investment and between hartals and external debt. The test results also support the evidence of existence of long-run relationship among the variables in the equation (1). It has been found that over time higher electricity consumption, domestic investment and trade openness give rise to more economic growth and higher external debt causes more decline of economic growth in Bangladesh. It has been also found that in the long-run hartals have insignificant negative impact but in the short-run hartals have significant positive impact on Bangladesh economy.

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