Page 42 - Azerbaijan State University of Economics

Hashim Al-Ali: An integrated macro-fiscal forecasting model and its application for
the Bangladesh economy

Macro-Fiscal Model's Variables (concluded)
variable
No. variable interpretation
(symbol)
87 P mi is the import price index for commodity (i) in year t
t
88 P d is the consumer price index at year t
i
89 M t-1 is the ith commodity’s imports into the economy in year t-1
90 GS t-1 is the government expenditure on Goods and Services in t-1
91 y t is per-capita real income
92 RMD t is real money demand in year t
93 GNI t is real gross national income (GNP)
94 RINR t is the short term real interest rate in year t
95 SM t-1 is actual stock of money at previous year
t
96 M 2 is broad money supply at year t
97 NX t nominal gross domestic product (X)
98 VM t is the velocity of the money in year t ( = NX t/M 2)
t
99 P m is the total imports price index
100 BOT t is the balance of trade in year t
n
n
101 M t is the total imports of the economy, i.e. [M t = M ct + M st ]
102 CAB t is the current account balance at year t
103 ONT t is estimated other net transfers in year t
FIR t and are the foreign investment revenues paid by Bangladesh in current year and last
104
FIR t-1 year respectively
105 NCAPA t-1 is the net capital account of the economy’s BoPs
106 RNI t is revenue from Bangladesh investment abroad in year t
107 NRV t-1 is the national reserve (foreign currencies) at year t-1
108 CAPAB t is the BoPs capital account in year t
109 BoPs t is the country balance of payments in year t

3.2 The Model’s Coefficients

Below are the main coefficients of the model that required to be estimated:
Table -2- : Macro-Fiscal Model’s Coefficients
Coefficient
No. Coefficient's Name
Symbol
1 αϰ Productivity of Capital
2 1-αϰ Productivity of Labour
3 A t Total Factor Productivity
4 α lb Constant Term of Sectoral Labour Function Estimates
5 l Sectoral Labour-Output Ratio
6 α 1 Constant term of the Consumption Function Estimates
7 β 1 Income Elasticity of Consumption
8 β 2 Lagged Consumption Elasticity
9 α g Public Investment Constant Term
10 μ 1 Public Investment Coefficient Related to Government Revenue
11 μ 2 Public Investment Coefficient Related to Annual Development Programme
12 α E Constant Term for Other Exports

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