Macroeconomic Stability in Bangladesh: Unraveling the Nexus between Exchange Rate, Inflation, and Export Dynamics through Nonlinear Modeling

Authors

  • A. H. M. Shahriar Department of Finance and Banking, Jashore University of Science and Technology, Bangladesh
  • Al Amin Biswas Department of Finance and Banking, Jashore University of Science and Technology, Bangladesh
  • Nishat Rumaly Department of Finance and Banking, Jashore University of Science and Technology, Bangladesh
  • Md. Johir Rayhan Department of Banking and Insurance, University of Dhaka, Bangladesh
  • Mohammad Jahangir Alam Department of Accounting and Information Systems, Jashore University of Science and Technology, Bangladesh
  • Uttam Golder Department of Finance and Banking, Jashore University of Science and Technology, Bangladesh

DOI:

https://doi.org/10.32479/ijefi.16968

Keywords:

Export, Inflation, Exchange Rate, NARDL, Bangladesh

Abstract

This study explores the effects of exchange rate and inflation on the export of goods and services in Bangladesh. Applying Nonlinear Autoregressive Distributed Lag (NARDL) model and using data from 1987 to 2021, in the case of a negative shock, this study finds a significant negative long-run association of exchange rate and inflation with export. Besides, in the case of positive shock, we see a meaningful positive relationship between inflation and exports. Following the findings, this study suggests exchange rate and inflation to ensure stability in Bangladesh’s economy through the issuance of new policies considering the reduction of inflationary pressures, formulation of contractionary monetary policy, recapping exchange-traded funds, and modification of exchange rate determination.

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Published

2024-10-30

How to Cite

Shahriar, A. H. M., Biswas, A. A., Rumaly, N., Rayhan, M. J., Alam, M. J., & Golder, U. (2024). Macroeconomic Stability in Bangladesh: Unraveling the Nexus between Exchange Rate, Inflation, and Export Dynamics through Nonlinear Modeling. International Journal of Economics and Financial Issues, 14(6), 174–181. https://doi.org/10.32479/ijefi.16968

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