Page 64 - Azerbaijan State University of Economics

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

7.1 The Principle Features of the Macro-Fiscal Forecasting Model:

The main principles of the model, in brief, are:
1. Develop a baseline (‘As Is’) forecast/solution for the Bangladesh economy.

2. Develop outlook and future forecast for various macro and fiscal variables and trends in
the economy.

3. Introducing policy scenario alternatives and measure their likely impact for the
Bangladesh economy.

4. Identify and determine priority sectors for investment and other government fund and

expenditures allocation purposes.
5. Effective tool in establishing a medium term macroeconomic and fiscal framework

(MTMFF), and creating the macro-sectoral links.

6. Provide an analytical framework for monitoring of the impact of the Budget, MTBF, DPs ….
7.2 Characteristics of Structuring and Articulation the Macro-Fiscal Modelling for

Bangladesh Economy:
These main characteristics can be summarized as:

1. The Macro-Fiscal Model is a clear and interconnected, in a logical manner, sets of
equations, variables, coefficients and parameters. All driven from the actual conditions of the

Bangladesh economy.

2. The Macro-Fiscal Model is flexible, realistic, empirically articulated with minimal
complexities and rigidities.

3. The Structured Macro-Fiscal Model is clear, well specified with all equations are stated
in a consistent economic and mathematical manner. Hence the model is not a black box.

4. The Macro-Fiscal Model for Bangladesh is being solved and considered to complement
viable economic analysis at FD/MEW and not for replacement of such analysis.

7.3 Some Selective Example of the Uses of the Macro-Fiscal Model for Economic

Development and Decision-Making Purposes:
Amongst others, the following are examples of the economic, fiscal and policy uses of the

model, in a Bangladesh context:

 Determining the optimal, feasible and realistic GDP and sectoral growth rates in the
economy.

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