Does Current Account Increase the Economic Growth in Bangladesh? The Analysis of GMM Technique

Abstract

Current account balance has played a role to enhance economic growth in Bangladesh. The major concentration of this study is to analyze the current account components of the balance of payment (BOP). This paper deals with quarterly base data from 2012Q3 to 2019Q4. The Generalized Method of Movement (GMM) technique has been implied to measuring the current account impact on economic growth. Four models have been developed where the estimated models deal with the current account balance (CAB) as the key variable. The result of model-1 represents that the current account has a negative relationship with economic growth in consideration of merchandise goods export and import. Model-2 to 4 represents that the current account has a positive impact on economic growth in Bangladesh. The sufficient current account is expected towards the purpose of financial and economic development where trade balance and service account have a significant role.