Mukti

সাতকাহন

Seven trashes collected by the senses.

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CPD vs Mr Muhith

Posted in economics by jrahman on June 12, 2011

 

One of the less discussed side effect of 1/11 was the loss of quality output from Centre for Policy Dialogue.  For the uninitiated, the Dhanmondi-based think tanks styles itself as Bangladesh’s Brookings.  And under Debapriya Bhattacharya, the organisation did produce several in-depth and critical analysis of Bangladesh’s economy and public policy in the middle of last decade. 

Then 1/11 happened, and Mr Bhattacharya was sent to Geneva by the then regime.  Analytical products churned out by CPD in the following few years were of a far lesser quality.  However, he seems to be back in Dhanmondi, ostensibly as a ‘Distinguished Fellow’ (whatever that means).  And their latest assessment of the economy is easily one of the best out of Dhanmondi in recent years (and one of the most comprehensive report on the subject). 

This doesn’t mean I agree with everything in the report — this is economics, there is always another hand, always something to disagree on.  But I’ll shelve detailed discussion of the report for later.  For now, let me focus on why it has earned CPD the ire of the Finance Minister. 

The Finance Minister has said the report is ‘totally rubbish’ because it raises questions about recent economic growth performance.    Over the fold, I give a primer of the issue, the CPD’s argument, and my take on it. 

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On 2009-10 economic growth

Posted in economics by jrahman on April 21, 2011

Every April or May, the Bangladesh Bureau of Statistics releases provisional national accounts for the current financial year.  Essentially, this involves taking the available data for the first 9 months or so of the year and estimating a year average.  Then, 12 months later, the final accounts are released.  Obviously, the final estimate is going to be reflect revisions to the provisional account. 

Now, if the BBS provisional accounts were unbiased, one would expect that revisions were equally likely to be upward or downward.  In some years, BBS would underestimate the strength of the economy, in other years it would overestimate things.  Turns out, BBS usually has a bias — its provisional estimates are more often than not too optimistic. 

This is shown in the chart o the left.  Here, the provisional growth estimate is on the vertical axis, and the final one is on the vertical.  If there is no revision in a year’s growth rate, then the dot will be on the 45 degree line.  Years where the final estimates are lower than the provisional one is below the 45 degree line.  In 12 of the past 16 years, the final estimates are lower than provisional (that is, provisional was too optimistic).  Only four years bucking this trend were 2000-01, 2003-04, 2004-05 and 2009-10. 

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