Bangladesh Bank Training Academy Journal

Abstract

The study empirically examines the impact of investment on the per capita income growth in Bangladesh within the period of 1980 to 2018. The paper also tries to explore the causal effects of total debt to investment and per capita income and inflation to per capita income in Bangladesh. This research uses Joahansen Juselius co integration method to establish the long run relationship among the variables. The study also employs Toda-Yamamoto augmented Granger causality test to find the direction of causality among the variables. The results of Joahansen Juselius co integration test confirm long run relationship among capita income, investment, total debt and inflation.According to the causality test results, there exist no causal effects from investment and inflation to per capita income growth in Bangladesh. Moreover, the results also revealed that the escalating total debt has no positive impact on investment and per capita income in Bangladesh. The study, therefore, recommends some plicy reforms particularly on the ground to accelerate investment specifically on the productive sector and to pay high concentration on the efficient debt management.