Welcome to Applied Macroeconomic Centre

A theory is appropriate as long as it fits into the fact; when a theory doesn't fit in the fact, it's wise to walk with the fact.

Thursday, February 19, 2015

Background Studies of 7th Five Year Plan

It's already known that Planning Commission (PC), Bangladesh is in the process of preparing the 7th Five Year Plan (FY2016-FY2020). Recently, PC uploaded, in its website, 25 background studies which are conducted sectoral experts of the country for person/group who has the interest to know how the planning process is done.

Link to access the background studies.   

Wednesday, February 4, 2015

Maintaining Growth in India: R. Rajan

Raghuram Rajan, Governor of the Reserve Bank of India, writes on basic factors that may shape up the Indian growth process in future. He broadly focused on three issues: deepening regional and domestic demand, strengthening India's macroeconomic institutions including his central bank, and finally, joining in the fight for an open global system. More specifically, he talked about:

  • Infrastructure development (for having links to domestic and international markets)
  • Human capital development (developing skills that are valued in the labor market and  the creation of jobs in firms that have an incentive to invest in training) 
  • Fiscal prudence (controlling budget deficits and monitoring the quality of budgets)
  • Low inflation (while ensuring optimal conditions for growth) 
  • Financial stability (no to asset price boom)
  • Attracting more FDI while keeping India's interest intact 
  • Searching more natural resources from abroad, and if necessary, using multilateral institutions for that 
  • Playing strong role in the international monetary system   

Most of these excellent points that he pointed out may be relevant for the Bangladesh case also. A worth reading for Bangladeshi policymakers.

Link for the article.

Tuesday, February 3, 2015

Bangladesh Inclusive Growth Diagnostic Study

USAID and DFID have jointly produced a study 'The Inclusive Growth Diagnostic Study' which identifies the binding constraints that deter households and firms in Bangladesh from making investments and taking risks that would significantly increase their incomes. The analysis provides a framework that will focus attention on the most pressing obstacles (electricity, low skills and governance) to development. Based on it, policymakers may identify appropriate reforms and projects that will ease those binding constraints, stimulating economic growth.

Sunday, February 1, 2015

Wasted Investment: China's $6.8-trillion hole?

The Economist published this worth reading article (Wasted investment: China's $6.8-trillion hole?) based on a research done by two Chinese government researchers. The topic is simple: based on the Chinese investment, the researchers calculated the efficiency of investment through incremental capital investment ratio (ICOR), and interestingly they found that China has made worthless investment of $6.8 trillion over 2009-2013 for building bridges and other infrastructure investments. With this ICOR analysis, they tried to show how Chinese investment has been becoming less efficient in the recent past.

While the Economist analysed the research findings of Chinese government researchers, and also it provided alternative analysis. Based on a coherent and using more realistic approaches to research, the Economist tried to show how Chinese researchers miscalculated the whole thing and what were the missing areas in their research that should be considered.

Researchers, who often get involved in debate, must read this article, at least, to know how an economic debate should take place.