Page 37 - Azerbaijan State University of Economics

the Bangladesh economy
Hashim Al-Ali: An integrated macro-fiscal forecasting model and its application for
THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.70, # 2, 2013, pp. 32-66

 Finally, this modelling technical report has been concluded by specifying the actual statistical

data used in solving the integrated model’s equations, the estimated parameters and coefficients, and
the forecasting results on different variables and dimensions until 2017. This model, however, has been

solved in two versions, namely: version one; is solving segmental four modules modelling and
forecasting, covering the four segments of the economy, while version two; is solving an integrated

policy model that pooling together all segments in one integrated framework, that can handle various
policy scenario alternatives. This will assist and expedite developing and enhancing the obtaining and

updating the statistical data for the modelling uses. Moreover, and by so doing, national indigenous

capacity, in macroeconomic and fiscal management models structuring, formulating, forecasting and
uses, within the Ministry of Finance and in Bangladesh at large, would be enhanced and furthered.

2. Introduction:

Comprehensive economic models in general, and macro-fiscal integrated models in
particular, are needed to ensure consistency and optimality in constructing government annual

integrated budgets and economic development programmes. Mathematical models can provide
decision-makers and planners with alternative optimal policies and scenarios, based on slightly

different objectives and/or assumptions. Hence, an informal choice may be made among these
scenario alternatives. Thus, this allows policy making to be evidence-based with objectivity and

scientific in orientation. In addition to revealing the implications of policy decisions by the

relevant authority, the macroeconomic-fiscal models make direct and indirect impacts of various
policies obvious to decision-makers. Besides, the future structure and growth path for the

economy can be simulated using these mathematical/economic models. This is basically what
macro-fiscal forecasting models do and that is why so much consideration and attention has been

given, in recent years, to the use of applied models in macroeconomic development and
planning, national and sectoral economic analysis and public finance management fields.

Without an analytical framework, attempts to solve problems in one area or segment of the

economy often aggravate those in other areas and segments. Arising from the situation analysis
which was made possible by macroeconomic-fiscal models, for instance governments in some

countries, have been able to take remedial actions on the most feasible ways of redressing the

negative impacts of policy, which arise from the implementation of medium-term plans, investment
programmes, medium-term budget frameworks and/or annual budgets. Ordinarily, annual budgets,

medium term plans and strategies as well as long term development visions, evolve their policy

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