The Relative Effectiveness of Monetary and Fiscal Policies on Economic Growth in Bangladesh
Md. Abu Hasan,
Md. Ashraful Islam,
Md. Abul Hasnat,
Md. Abdul Wadud
Issue:
Volume 5, Issue 1, February 2016
Pages:
1-7
Received:
7 January 2016
Accepted:
15 January 2016
Published:
31 January 2016
Abstract: This study explores the relative effectiveness of monetary and fiscal policies on economic growth in Bangladesh for the period from fiscal year 1974 to2015 employing cointegration and Vector Error Correction Model (VECM). We use nominal GDP as a proxy for economic growth, while broad money supply (M2) and reserve money (RM) as proxies for monetary policy. Total government revenue (TR) and total government expenditure (TE) are used as proxies for fiscal policy. The Johansen cointegration tests reveal that monetary policy (M2 and RM) has a greater long run positive impact on economic growth over fiscal policy in Bangladesh. The results of VECM show that there is a weak long run causality running from monetary and fiscal policies to economic growth. VECM also finds that GDP, M2 and TR play a part to adjust any disequilibrium, while TR picks up the disequilibrium rapidly and guides the variables of the system back to equilibrium. VECM Granger causality/block exogeneity Wald test results show that M2 is the leading indicator with respect to economic growth in Bangladesh in the short run. Moreover, economic growth is a leading indicator with respect to fiscal policy in the short run. Thus, we conclude that monetary policy is the more effective channel than fiscal policy to promote economic growth in the short run and long run in Bangladesh.
Abstract: This study explores the relative effectiveness of monetary and fiscal policies on economic growth in Bangladesh for the period from fiscal year 1974 to2015 employing cointegration and Vector Error Correction Model (VECM). We use nominal GDP as a proxy for economic growth, while broad money supply (M2) and reserve money (RM) as proxies for monetary ...
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Estimation of Supply Response of Livestock Products: The Case of Kajiado District
Manyeki John Kibara,
Ruigu George,
Mumma Gerald
Issue:
Volume 5, Issue 1, February 2016
Pages:
8-14
Received:
5 August 2015
Accepted:
12 August 2015
Published:
25 February 2016
Abstract: During early 1970s and early 1980s economic conditions in general had been favourable for the Kenyan farm sector. Following market liberalization in the late 1980s, farmers and in particular livestock farmers experienced economic hardship. The economic situation facing livestock industry was characterized by wide fluctuation and unpredictability of the livestock and livestock product prices and uncertainity in livestock production and marketing. These shocks coupled with economic conditions in the livestock sector rendered profit-oriented decision-making by livestock farmers and other participants in the industry difficult. The objective of this study was therefore to estimate the livestock products supply responses using an error correction method. The estimators of the model were derived by way of regression and correlation after subjecting the data collected to vigorous testing for stationarity using Augmented Dick-Fuller test. Conclusions were made on the basis of R2 (coefficient of determination) as well as the t statistic. The results indicate that the estimated short run supply function, live cattle and cattle hides were price elastic while sheep and goats were inelastic. The long run supply response was positive although inelastic for live cattle and goats while cattle hide was elastic. The results also showed positive short run price elasticity. On the basis of t-value, the findings were conclusive with all the variables analyzed being statistically significant. The study also found that live cattle and cattle hide supply adjust to equilibrium levels quite fast. These results suggest that livestock farmers in the study area adjust their supply quiet early, probably as soon as they gain the slightest indications that the market signal would be permanent.
Abstract: During early 1970s and early 1980s economic conditions in general had been favourable for the Kenyan farm sector. Following market liberalization in the late 1980s, farmers and in particular livestock farmers experienced economic hardship. The economic situation facing livestock industry was characterized by wide fluctuation and unpredictability of...
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