Dynamics between Bangladeshi Real Consumption and Economic Growth

Abstract

Abstract: A Vector auto-regressive model was estimated using annual data from 1980 to 2014 to assess the causal relationship between Bangladeshi real consumption and GDP. The estimation results suggest Bangladeshi real consumption and real GDP mutually affect each other. This estimation result contradicts an earlier report by Sakib-Bin-Amin (2011) who examined annual data during the 1976-2009 time frame. This finding suggests that the Bangladeshi government should not promote exports in the age of globalization and the fashionable Washington Consensus Development doctrine at the expense of domestic consumption in development of the national economy. This empirically supported approach certainly mitigates the negative impacts of the adverse international economic conditions on the national economy.