Page 60 - Azerbaijan State University of Economics

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

Accordingly, the model has incorporated quite few policy variables, as can be seen from

the above table, which can be used as instruments and/or scenarios alternative variables’ value,
to measure the reaction of the economy to any change to the condition, in order of magnitude, of

these policy variables. Hence, carrying out sensitivity analyses, which is related to the changes in
any of these variables and their impacts on the economy as a whole, or on a given segment of the

four segments of the national economy. However, the policy variables, that are most relevant

to Bangladesh economic conditions, and its stage of development, can be, amongst others,
identified as: i) budget Revenues mix-components, ii) taxation systems and rates, ii) private

Sector Investment trends, iv) growth of garment exports, v) growth of remittance from abroad,
vi) different incremental capital-output ratios (ICOR) for (different sectors) and/or for the

economy as a whole, vii) growth rate of labour force and/or productivity, viii) subsidies pattern

and proportional structure, ix) government employees wage level, x) government expenditure
structure and pattern, by sector and/or line ministry, xi) change in sectoral structure within the

economy (sectoral priorities), and xii) imports trend and/or commodity-mix.
Furthermore, these, and other, policy variables can be inputted, into the system as a percentage

or absolute change. Hence, various scenarios can be ran, using the integrated model’s systems
solution’s methodology.

6.3 Tabulation of the Selective Macro-Fiscal Forecasting Modelling Results:

Tabulation of the Results is the output of the model’s application. The model when runs
will generate tabulation of the Results start from 2011 to 2017. This being arrived at by using the

modelling algorithms, together with the uses of the derived coefficients, parameters and policy
variables, and in full interactions with the integrated behavioural and structural equations. The

output is a excel sheet containing “base-case” scenario results.
At this point, the report will highlight some selective modelling results, whereby showing

the likely behaviour of the most significant macroeconomic and fiscal variable, during the

forecasting period (2011-2017). The following tables have depicted the model’s results of some
selected important macro-fiscal variables.

59