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

Md. Sharif Hossain, Md. Thasinul Abedin

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.


Keywords


Hartals, VEC Model, Causality, Short-run and Long-run Impacts. Economic Growth

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ISSN-1682-2498