Inflation, Economic Growth and the Balance of Payments in Bangladesh: A Macroeconomic Study

The search is on for an econometric model to aid economists and policy makers in the analysis of inflation and balance of payments problems, in the examination of the effects of different policy changes on major macrovariables in the economy, and in the design of stabilization policies which will not decelerate economic growth. This book attempts to present such a model within a macroeconomic framework. M.A. Hossain takes a closer, critical look at Bangladesh's inflation and balance of payments. Using a combination of structural and monetory theories of inflation and balance of payments he has developed an integrated, quarterly, macroeconomic model of inflatio economic growth and balance of payments for Bangladesh for the period 1974-1985. He has based his model on two hypotheses: firstly that inflation in Bangladesh is a monetary phenomenon, and secondly that persistent trade deficits are inherent in its foreign-aid-based development strategy and its over-valued exchange rate policy.