Impact of Macroeconomic Determinants on Economic Growth in Bangladesh : An ARDL Approach

Bangladesh's considerable growth in recent years has drawn the attention of policymakers and academicians all around the world. Therefore, the current study is an effort to test the influence of macroeconomic determinants on Bangladesh’s economic growth. The ADF and PP tests are used to determine whether the time series is stationary or not. The Autoregressive Distributed Lag procedure is applied to assess the long-run and short-run associations among the variables using annual time series data from 1991 to 2020. The unit root test demonstrates that, excluding the aid and inflation, all variables are stationary at first difference. The empirical findings suggest that FDI, Foreign Aid, Government Expenditure and Trade Openness have a positive and significant effect on GDP in the long run. Whereas, Debt has an adverse impact on the economy’s growth in the long as well as short run. Therefore, the policymakers of Bangladesh should focus on greenfield investments, exports and foreign aid while the reliance on external debts should be reduced