Page 49 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.70, # 2, 2013, pp. 32-66

and forecasting the growth rate of the GDP for the economy, at a given point of time. Given the

fact that Bangladesh has quite high international labour comparative advantage.
The demand (expenditure) side of the economy; this is the most comprehensive approach

to forecast basic macroeconomic variables, and to project the GDP growth rate of the economy,
during the coming medium term budgetary periods. The approach analyzes and forecasts the

national products and its growth rate, through analyzing and forecasting the various final demand
components of the economy. That said, These structured relationships, have been empirically

articulated using a well derived and harmonized time series set of operational statistical data

available in the economy. These data has been worked out to fit the modelling structural set of
equations that have designed for each component of the final demand on gross domestic product in

the national economy. Thus, by and large, the main observed component variables of the final uses

of domestic product can be, in this phase of modelling efforts, presented as:
Household Final Consumption + Government Consumption Expenditures +

Investment (Government and Private) + Changes in Stock + Exports – Imports = GDP.
This can be written as:

X t = C t + G t + I t + CS t + E t – M t = GDP
In our implemented integrated macroeconomic-fiscal model setting, equations (21-54)

have been designed, structured and solved to quantify all the final demand components of the

national economy. That said, equations (22-27) have quantified and solved for private
consumption demand and its perspective. While equations (28-37), have been structured and

articulated to forecast for government recurrent expenditure, as part of the fiscal sector segment,
in the economy, by its different items and uses. Furthermore, gross investment size and contents

in the economy, together with its two main institutional (public and private sector) belonging,
have been modelled and quantified, together with the investment-saving equilibrium/gap, these

are all reflected through equations (38-43). As a vital strategic development prerequisite is to

sustain macroeconomic stability and fiscal sustainability in the economy, the financing domestic
investment is considered to be an important policy issue and an integral part of the

macroeconomic-fiscal modelling structure and policy variables for a developing economies, such

as the Bangladesh economy. The primary objective is to finance investment through the
national saving (and national resources). However, when national available saving is not

sufficient to finance total required investment, and this, however, is the case in many developing

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