Twin deficits hypothesis in Bangladesh: an empirical investigation

Dey, Sima Rani; Tareque, Mohammad

doi:10.1108/ijoem-06-2020-0628

Cited by 16 publications

(5 citation statements)

References 39 publications

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“…When there is International Trade, Politics and Development disequilibrium in the system, the ECT coefficient suggests that it can be adjusted back to long-run equilibrium at an average pace of 1.868. Therefore, the result of Table 5 confirms the validity of twin deficit hypothesis which is in line with Ayinde et al (2021) and Dey and Tareque (2021).…”

Section: 6supporting

confidence: 75%

“…The idea that budget deficits affect trade deficits indirectly rather than directly is supported by a vector autoregressive model. Dey and Tareque (2021) proposed a multivariate model for the Bangladeshi economy, taking interest rate, currency rate, governance indicator, and trade deficit, alongside current and budget deficits as variable. In both the short and long run, ARDL bound testing suggested a unidirectional causality from budget deficit to current account deficit.…”

Section: Internationalmentioning

confidence: 99%

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Justification of the twin deficit hypothesis in Bangladesh

Lubna,

Saha

2024

ITPD

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PurposeIn light of Bangladesh’s economy, the goal of this study is to examine the “Twin Deficit Hypothesis (TDH),” which refers to a link between the budget deficit and the current account deficit. This study used yearly time series data from 1980 to 2020 to investigate the phenomena.Design/methodology/approachA multivariate autoregressive distributive lag (ARDL) model has been presented for empirical investigation, with the ARDL bound test investigating the co-integration between the inadequacies. As some of the variables in the bound test lack co-integration, the study adds a multivariate vector autoregressive (VAR) model later on.FindingsWith evidence of the result, the study supports the validation of twin deficit hypothesis in Bangladesh economy since both current account deficit and fiscal deficit affects each other significantly whereas Granger causality test confirms that fiscal deficit causes current account deficit but not the other way around.Practical implicationsThe government should maintain a restrictive monetary policy in order to stabilize the current account deficit.Originality/valueThe novelty of this study is the incorporation of inflation, real exchange rate and GDP per capital to TDH that together form the basis for a macroeconomic snapshot of the economy.

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Section: 6supporting

confidence: 75%

Section: Internationalmentioning

confidence: 99%

Justification of the twin deficit hypothesis in Bangladesh

Lubna,

Saha

2024

ITPD

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“…political, financial and economic, for 146 countries, since 1984. As discussed earlier, the authors apply PCA method, combining all 12 dimensions of ICRG for making the composite governance variable in this estimation (Dey and Tareque, 2021). The main reason of using PCA is to reduce the number of dimensions in the data without losing too much information.…”

Section: Methodsmentioning

confidence: 99%

An inquiry into the achievements in health outcomes of Bangladesh: role of health expenditure, income, governance and female education

Sultana¹,

Ahmed²,

Tareque³

2021

IJHRH

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Purpose Bangladesh is applauded for its achievement in various health and social outcomes though criticized for its failure in properly dealing with governance issues. The purpose of this paper is intends to see how the health outcomes (in case of life expectancy, under-five mortality and adolescent fertility) are impacted by health expenditure (both public and private), per capita income in presence of overall governance and female education. This paper assumes that rapid progress in female education reflects the Bangladeshis’ social responsiveness to change. Design/methodology/approach This paper uses autoregressive distributed lag technique to estimate the models with data ranges from 1990 to 2016 under two different scenarios. Findings This study has found that all the explanatory variables exert significant impact on health outcomes. Furthermore, public health expenditure is augmented with a composite governance issue, and this enhances robustness as well as statistical significance of the models. These suggest that the governance issues play a very crucial role to achieve the expected health outcomes. Female secondary enrolment ratio appears with improved coefficients in terms of sign and magnitude for all the health indicators. Originality/value This paper contributes to the existing literature showing econometric evidence that highlights the importance of governance and female education in improving health outcomes of Bangladesh apart from health expenditure and per capita gross domestic product.

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“…As explored in the long-run estimation, the negative coefficient of the exchange rate is supportive for export promotion and thus economic growth for BCIM economies. Specifically, depreciation in currency promotes the exports of source countries as importers are encouraged to import due to currency depreciation (Dey, Tareque, 2021). The ARDL estimation shows the negatively statistical significance of exchange rates on economic growth, which is relevant to all export-dependent countries in the long run (Table 4).…”

Section: Findings Of Long-run Elasticitymentioning

confidence: 99%

Assessment of Export-Led Growth Hypothesis: The Case of Bangladesh, China, India and Myanmar

Islam¹,

Tareque²,

Moniruzzaman³

et al. 2022

EoR

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The Asian countries, particularly Bangladesh, China, India and Myanmar, have been witnessing impressive economic growth rates due to their trade performance in the international market. Although export-led growth assumption is functional in these economies, existing pieces of literature hardly considered them in their studies. Against this backdrop, the present study investigates the export-led growth hypothesis for four South Asian countries — Bangladesh, China, India, and Myanmar — covering country-specific different time ranges. This research employs the autoregressive distributed lag (ARDL) bounds testing approach to co-integration and the MWALD Granger causality test to determine the causal relationship between variables. The results obtained from the autoregressive distributed lag method confirm the co-integration among the variables. In addition, the Granger causality test explores both the export-led and growth-led export hypotheses in Bangladesh and India as per the bidirectional causation between exports and economic development. Only the export-led growth theorem is relevant to China, and the growth-led export hypothesis is valid in the case of Myanmar based on the unidirectional causation between these variables. Therefore, any joint footstep of BCIM countries is critical to promoting exports by penetrating new destinations with diversified export goods and services. The obtained findings also indicate the potential for utilising these countries’ unused resources to encourage exports to uplift the existing growth trajectory.

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Twin deficits hypothesis in Bangladesh: an empirical investigation

Cited by 16 publications

References 39 publications

Justification of the twin deficit hypothesis in Bangladesh

Justification of the twin deficit hypothesis in Bangladesh

An inquiry into the achievements in health outcomes of Bangladesh: role of health expenditure, income, governance and female education

Assessment of Export-Led Growth Hypothesis: The Case of Bangladesh, China, India and Myanmar

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