Impact of Selected Macro-Economic Variables on the Export Performance of Bangladesh

This paper investigates the short run and long run dynamics between export performance of Bangladesh and selected macro-economic variables using various econometrics tools. The variables considered are Interest rate, Inflation rate, Broad money (M2), and Exchange rate and Quantum index of industrial production. Monthly data has been analyzed over the period spanning July 2011 to June 2016. According to Johansen multivariate co-integration tests the export of Bangladesh and the selected five macroeconomic variables are co-integrated, this gives a clear indication of long-run associations. No short-run dynamics is found through error correction model which is again strengthened by Variance Decomposition (VDC) tests. The VDC test established that, a significant proportion of the variability in the export performance was mainly due to its own innovations while only a minimal proportion was explained by the chosen variables. The findings of existent long run relationship and no short-run dynamics can help astute policy makers in making efficient, appropriate and effective decisions regarding Export performance and policy.