...Monetary Policy of Bangladesh Lecture Synopsis: 2 NSU, MBA Program Dr. Salehuddin Ahmed(Sld) BUS 530 (Section – 1 & 2); SPRING, 2013 Introduction Both in developed and developing economies, monetary policy seeks to maintain price stability accompanied by sustained stable output growth in the face of internal and external shocks that are faced from time to time. For developing economies like Bangladesh with significant underemployment/under exploitation of production factors, stimulating higher growth is imperative for rapid reduction and eventual elimination of endemic poverty, and is therefore an overriding priority. The stimulus provided by monetary policy in accommodating the growth aspirations must not however jeopardize macroeconomic stability and future growth; and the pursuit of monetary policy comprises of various supportive measures to attain the highest sustainable output growth while adjusting smoothly to internal and external shocks that the economy encounter from time to time. History and Objectives of Bangladesh Monetary Policy Objectives of the monetary policy of the Bangladesh Bank as outlined in the Bangladesh Bank Order, 1972 comprise of attaining and maintaining of price stability, high levels of production, employment and economic growth. In the decades of seventies and eighties, monetary policy in Bangladesh was conducted with full direct control on interest rates and exchange rates, as also on the volumes and directions of credit flows...
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...Causes of Inflation: A Study in the Context of Bangladesh Mohammad Nayeem Abdullah1 Robaka Shamsher2 Newaz Ahmed Chowudhury3 Abstract In Asia, Bangladesh is one of the hardest hit by the current wave of inflation and oil price hike. The economy has been observing double digit inflation growth on point-to-point basis since July 2007. In Bangladesh, the correlation between per capita income and food weight in total Consumer Price Index (CPI) is one of the highest in the world and the economy is vulnerable to sharp hikes in fuel and non-fuel commodity prices. The BDTUS$ exchange rate has been depreciating steadily for some time, reaching a record high of BDT 72.70 per USD in January 2011, which has direct impact on food inflation that Bangladesh is currently experiencing. An International Monetary Fund (IMF) study shows food prices on headline inflation has been a staggering 55.9 percent in Asia in 2007, whereas the figure was 34.1 percent in the 2000-06 period. The researchers highlight that a further depreciation of the BDT could lead to additional cost push inflation for Bangladesh. This article attempts to investigate causes and consequences of inflation on the economy of Bangladesh. This paper also reviews the past record of the inflation and makes a forecast on the possible movement of inflation. At the end on the paper the researchers forward some strategic points that might be useful to reduce inflation. Keywords: Food inflation, oil price hike, general inflation, world food...
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...Introduction Bangladesh is a country of more than 140 million people, and it is one of South Asia’s least developed countries. The country has under gone a major shift in its economic philosophy and management in recent years. At Bangladesh’s birth, the country embraced socialism as the economic ideology with a dominant role for the public sector. But, since the mid-seventies, it undertook a major restructuring towards establishing a market economy with emphasis on private sector-led economic growth. Bangladesh achieved good economic progress during the 1990s by adopting a series of structural and economic reform measures. The stabilization program reduced inflation as well as fiscal and current accounts deficit and established a healthy foreign exchange reserve position. Economic performance improved with gross domestic product (GDP) growth averaging 5 percent in the 1990s compared with 4 percent in the preceding decade. The acceleration in economic growth was accompanied by decreased incidence of poverty and a distinct improvement of some key social indicators. Rapid growth in food grain production has been a remarkable feature of the country’s economic performance in recent years. In FY2000, Bangladesh reached self-sufficiency in food grain production. A combination of factors accounts for the robust growth of the agriculture sector, and in particular of food grains. According to a World Bank estimate, Bangladesh has the 36th largest economy in the world in terms of GNP based...
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...ASSIGNMENT TWO | Research on the currency of Bangladesh | | GROUP MEMBERS:IFTESHAM ARA JAHAN 082604030FARIHA NOWSHIN HAQUE 1020276030MINHAZUR RAHMAN 081314030MUSA HABIB KISHAN 0930442030NUSRAT MINALLAH SHOSHI 0910283030SIDRATUL MUNTAHA KHAN 0920517530 | Table of Contents Analysis of Bangladeshi Taka (BDT) against US Dollar($) 3 Factors that influences BDT 5 Analysis of Macroeconomic variables 7 Income level 7 Fig: Income receipts of Bangladesh from 2005-2012in US dollar 8 Income payments (US dollar) in Bangladesh 8 Effects of inflation on income 9 Effects of interest rates on income level: 11 Theory of Interest Rate Parity and BDT 12 Theory of Purchasing Power Parity 14 Theory of International Fisher Effect against BDT 16 Regulations on foreign currency transfers/remittances 16 Analysis of investment opportunity for US-based MNC 17 Analysis of Bangladeshi Taka (BDT) against US Dollar ($) Exchange rates play a vital role in a country's level of trade. This is critical to almost every free market-oriented economy in the world. Numerous factors such as inflation, interest rates, current-account/trade balance, public (government) debt and political environment determine exchange rates and all are related to the trading relationship between any two countries. The exchange rate, measured as a number of units of local currency per unit of foreign currency, is the price of the...
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...Trends and Comparison of Labor Wages in Different Industries Submitted To DR.RABBANI, A.F.M MASUM American International University Bangladesh Kemal Ataturk Avenue, Banani, Dhaka - 1213 Prepared & Submitted By Ahsan Habib ID: 13-96758-2 Date of Submission 22 March 2014 AMERICAN INTERNATIONAL UNIVERSITY BANGLADESH AIUB Trends and Comparison of Labor Wages in Different Industries Letter of Transmittal 22 March2014 To Dr. Rabbani, A.F.M Masum American International University – Bangladesh Dear Sir, First, I would like to thank you for approving this invaluable topic. I have the pleasure to submit my report titled on “Trends and Comparison of Labor Wages in Different Industries”. It was great opportunity for me to work on such a significant topic. I have used interview through structured questionnaire as my tools of finding out real fact. As a sample of the study, I took different industries in the Dhaka city. Conducting this research was a great learning experience for me. Through questionnaires and interviews, I have learned the fact that why labor wages are vary industry to industry. Once again I would like to thank you for giving me this opportunity to work on this realistic topic. I hope it will be helpful for my future career path. Yours Sincerely, Ahsan habib 13-96758-2 ...
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...WHAT IS INFLATION Inflation is best defined as a sustained increase in the general price level leading to a fall in the purchasing power or value of money MAIN CAUSES OF INFLATION * Demand-pull inflation: Demand-pull inflation is likely when there is full employment of resources and aggregate demand is increasing at a time when SRAS is inelastic. * Cost-push inflation: Cost-push inflation occurs when firms respond to rising costs, by increasing prices to protect their profit margins. There are many reasons why costs might rise: 1. Component cost- This might be because of a rise in world commodity prices such as oil, copper and agricultural products used in food processing 2. Rising labor costs-caused by wage increases, which are greater than improvements in productivity. Wage 3. Higher indirect taxes imposed by the government –A rise in the specific duty on alcohol and cigarettes, an increase in fuel duties or a rise in the standard rate of Value Added Tax. In the case of food rice demand and cost both are playing role. Inflation is an inevitable part of any economy. It is not always a bad thing though and it is necessary in a healthy economy. All in all, inflation keeps our economy going and the world turning, even if portrayed as a villain. HOW INCREASE IN FOOD PRICE IMPACT ON INFLATION The food price hike has accelerated the general inflation rate in the country. If the food price level rises at an existing rate of 1.31 percent per month and if adequate...
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...economic indicators of Bangladesh economy Introduction The Bangladesh economy has experienced both macro-economic stability and robust economic growth following the transition to a democratic rule in the early of 1990s. In the backdrop of the deep macro-economic crisis of the late 1980s, a series of stabilization measures were introduced in the Bangladesh economy which largely restored macro-economic stability in the early 1990s. Economic growth in Bangladesh averaged 6.3 percent during financial year (FY) 04-07. The economy has once again proved its resilience in achieving stronger than expected growth despite having to contend with the adverse effects of unfavorable weather conditions in financial year (FY) 04, the subsequent sharp price increase in oil and other essential imported commodities and periods of political unrest and uncertainty. Sustained gross domestic production (GDP) growth coupled with strong growth in exports and remittance has led to a marked improvement in the fiscal and balance of payments position and substantial improvements in the economic fundamentals necessary for macroeconomic stability. However, the rise in the inflation rate and further evidence of income inequality have tempered growth's direct impact on the quality of life. Macro Economic indicators In the past decade, Bangladesh enjoyed a positive growth rate in GDP and other macro economic indicators. As the most densely populated country in the world, Bangladesh is facing the problems...
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...implementation in Bangladesh, this paper targets to analyze the impact of monetary policy on the inflationary situation. Methodology: The study depends on I. Extensive literature review of external sources on central banks on formulation and implementation ofmonetary policy for the country II. Publications of Bangladesh Bank Scope of the paper: 1. First of all, monetary policy is a deep sea to swim through. Though Bangladesh practices and implements a limited number of instruments, the mix is always complex to grab the main idea behind it. Extensive analysis of the mix is beyond the scope of the paper. 2. Framing of indices of central bank policies is beyond the limit of this paper. 3. Structured data is hard to collect from the departments of Bangladesh Bank, so complex calculations and data analysis is deliberately avoided. Bangladesh Bank (BB): The central bank of the country, was established as a corporate body by the Bangladesh Bank Order, 1972 (P.O. No. 127 of 1972) with effect from 16 December, 1971 by acquiring the liabilities and assets of erstwhile State bank of Pakistan in East Pakistan. Bangladesh Bank is the central bank of the country | | There is a cross departmental committee on monetary policy (MPD) headed by a deputy governor, which includes the officials of the core departments of the bank for monitoringof the money market and exchange rate operations in the short term. Inflation: In economics, inflation is the rise in the...
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...------------------------------------------------- The Monetary Policy of Bangladesh Introduction The policy adopted by the central bank for control of the supply of money as an instrument for achieving the objectives of general economic policy. With the shifts of the policy stance of the government in various phases, necessary adjustments were made in the country's monetary policy. The principal function of the Department is to help the bank in the formulation of monetary and credit policies and also to assist it in discharging its duty as adviser to the Government on economic and financial matters. To this end, the department keeps the top executives of the bank fully informed of latest economic development both at home and abroad, in a regular and systematic manner. For this purpose the Department keeps a close watch on trends in the domestic economy as well as on international economic developments with particular reference to monetary, fiscal and trade problems and policies. Domestic and international economic developments are brought within the compass of comprehensive reports and reviews which are submitted for perusal of the Governor, Deputy Governor, and Senior Executives of the bank, as also the bank’s Board of Directors. Monetary Policy Monetary policy is the term used by economists to describe ways of managing the supply of money in an economy. Monetary Policy is the management of money supply and interest rates by central bank to influence...
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...qwertyuiopasdfghjklzxcvbnmqwerty uiopasdfghjklzxcvbnmqwertyuiopasdf ghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopasdfghjkl zxcvbnmqwertyuiopasdfghjklzxcvbnm qwertyuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopasdfgh jklzxcvbnmqwertyuiopasdfghjklzxcvb nmqwertyuiopasdfghjklzxcvbnmqwer tyuiopasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfghjklzx cvbnmqwertyuiopasdfghjklzxcvbnmrt yuiopasdfghjklzxcvbnmqwertyuiopasd fghjklzxcvbnmqwertyuiopasdfghjklzxc vbnmqwertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwertyuiop asdfghjklzxcvbnmqwertyuiopasdfghjkl The Autonomy of Bangladesh Bank ECO 432 Term Paper Submitted by: Sardar Mohammad Imrose Sumaiya Mahabub Kazi Sakif Zaman Reza Maria Matin Samiha Moyeen P a g e 2 Table of Contents Introduction:.........................................................................................................................................3 Background:..........................................................................................................................................3 Theory of Autonomy:..........................................................................................................................4 What is Autonomy?..............................................................................................................
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...INTRODUCTION Bangladesh, one of the least developed countries, undergoes numerous economical dilemmas such as shortage in power supply, poverty, lack of skilled labors and proper infrastructure, high unemployment rate, low standard of living, continuous disequilibria in the economy, defective administrative and inappropriate tax structure. However, this country has a good prospect of doing better because of having huge natural and other resources which fascinated many investors to invest in Bangladesh. In spite of going through all these hardships and troubles, this country is trying to overcome these lacking through the development of different macro aggregates. The macro aggregates that affect the development of the economy of Bangladesh are National Income, Inflation, Exchange Rate, Export, Import, Remittance, Money Supply and Government Expenditure. For this research paper, four macro aggregates have been selected and then comparison and demonstration have been done about how these four factors influence the economy of Bangladesh in the reference period (April 2013 to June 2013). The four macro aggregates are: 1. Exchange Rate 2. Export 3. Inflation 4. Remittance Among all other indicators, these four would be the most relevant and constructive ones in terms of explaining Bangladesh’s economy. 1.1 OBJECTIVE The term project has the following objectives: * To have extensive knowledge of Exchange Rate, Export, Inflation and Remittance...
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...Analysis of Changing Roles of Bangladesh Bank: Industrialization perspective 1. Introduction The vision of the Bangladesh Bank is to develop continually as a forward looking central bank with competent and committed professionals of high ethical standards, conduct monetary management and financial sector supervision to maintain price stability and financial system robustness, support rapid broad based inclusive economic growth, employment generation and poverty eradication in Bangladesh. The mission is to formulate monetary and credit policies, manage currency issue and regulate payment system, manage foreign exchange reserves and regulate the foreign exchange market, regulate and supervise banks and financial institutions and advise the government on interactions and impacts of fiscal, monetary and other economic policies. Bangladesh Bank maintains an interest rate structure that provides fair return on financial assets, supports growth in the real sector and promotes development of markets in bond and securities. The central bank provides precise prudential regulatory, risk management and disclosure framework to protect solvency and liquidity of individual institutions and stability of the overall financial system, acting as lender of last resort if and when needed. The central bank maintains liquidity conditions and credit policies ensuring adequate credit flows at market driven flexible interest rates for all productive economic activities,...
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...Introduction Fiscal policy generally refers to the use of taxation and government expenditure to regulate the aggregate level of economic activity in a country. Fiscal policy in Bangladesh basically comprises activities, which the country carries out to obtain and use resources to provide services while ensuring optimum efficiency of the economic units. The policy influences the behavior of economic forces through public finance. Major objectives of the fiscal policy of Bangladesh are to ensure macroeconomic stability of the country, promote economic growth, and develop a mechanism for equitable distribution of income. The main tools to achieve these objectives are variation in public revenue, variation in public expenditure, and management of public debt. These are reflected in the budgetary operations of the government, prepared and implemented on year-on-year basis. While the Government’s fiscal strategy emphasizes the need for maintaining overall Macroeconomic stability and fiscal sustainability, the government is investing substantially in building physical infrastructure especially in the communication and Power sector as well as in developing human resources for achieving growth and augmenting the development process – necessary conditions for reducing poverty. The present government has planned to raise the level of investment to 30-32 percent of GDP in order to achieve a GDP Growth rate of 8 percent by 2013 as envisaged in “Vision 2021”. This investment...
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...The Role of Aggregate Demand and Supply Shocks in a Low-Income Country: Evidence from Bangladesh Omar H.M.N. Bashar The Journal of Developing Areas, Volume 44, Number 2, Spring 2011, pp. 243-264 (Article) Published by Tennessee State University College of Business DOI: 10.1353/jda.0.0095 For additional information about this article http://muse.jhu.edu/journals/jda/summary/v044/44.2.bashar.html Access Provided by Bangladesh University of Professionals at 05/29/11 5:42AM GMT THE ROLE OF AGGREGATE DEMAND AND SUPPLY SHOCKS IN A LOW-INCOME COUNTRY: EVIDENCE FROM BANGLADESH Omar H.M.N. Bashar Deakin University, Australia ABSTRACT This paper explores the relative role of aggregate demand and supply shocks in affecting the output level and inflation rate in a low-income country vulnerable to various economic shocks. The study uses Bangladesh data, and following Cover et al (2006), employs a modification of the BlanchardQuah (BQ) approach, in which the two shocks are allowed to be correlated. Strong evidence is found for the hypothesis that aggregate demand and supply shocks are interrelated in Bangladesh. For the case in which causality is assumed to be running from demand to supply shocks, it was found that an independent supply shock plays significant role for fluctuations in inflation, which was absent in the standard BQ model. The results suggest that a tightening of monetary policy may lead to an adverse effect on the long-run growth potential and some supply-side...
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...DEVELOPMENT FINANCE & ITS ROLE IN RURAL AREAS TO ALLEVIATE POVERTY 2010 M. MOBASHAR ALI & RANA RASHID REHMAN STATE BANK OF PAKISTAN-BANKING SERVICES CORPORATION SIALKOT 9/3/2010 Contents INTRODUCTION 4 LITRATURE REVIEW 4 REVIEW OF POVERTY IN PAKISTAN 6 SBP INITIATIVES IN TO PROMOTE DEVELOPMENT FINANCE 8 ESTABLISHMENT OF DEVELOPMENT FINANCE GROUP 8 ESTABLISHMENT OF AGRICULTURE FINANCE DIVISION 9 PUBLIC AWARENESS PROGRAMS 10 DEVELOPMENT FINANCE PROGRAMS CURRENTLY IN OPERATION 11 NONGOVERNMENTAL ORGANIZATIONS (NGOs) 11 RURAL SUPPORT PROGRAM (RSP) 11 AGA KHAN RURAL SUPPORT PROGRAM (AKRSP) 11 SARHAD RURAL SUPPORT PROGRAM 12 NATIONAL RURAL SUPPORT PROGRAM (NRSP) 12 ROLE IN POVERTY ALLEVIATION 12 TRANSMISSION MECHANISM OF FINANCE TO POVERTY ALLEVIATION 14 DEVELOPMENT FINANCE SUCCESS STORIES 15 CONCLUSION 16 BIBLIOGRAPHY 17 Figure 1 8 Figure 2 10 Figure 3 10 Figure 4 13 Table 1 7 Table 2 7 Table 3 9 Table 4 10 Table 5 13 INTRODUCTION Development Finance is the offering of financial services to the entrepreneurial poor that contributes finally to the economic growth. Although the most notable of these services is the provision of credit, many other offerings are a part of Development Finance including credit for business activities and credit for emergency and for the fulfillment of life cycle needs. Many Development Financial Institutions (DFIs) give finance for...
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