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"1he current situation of Philips curve of
Bangladesh and a discussion on it"


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SuHlTTF0 T0 SuHlTTF0 Y
Suborna 8arua Uttam Go|der
Lecturer ka[|b 8an|k
Department of I|nance Cn beha|f of Group 08(8)
Iagannath Un|vers|ty Dhaka 2
st
ear 2
st
Semester

88A (I|nance)
Iagannath Un|vers|ty
Dhaka

elp 008801917133936





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6R0uP t0 -08()
Mome of fhe 0roup Members
>ciiu unc Jo ro
oi |d. luid tuur o,i-
o2 |d. |orii touir o,i-i
o Oiiun Godci io-2ii
o+ iuui Juunur io-o2
o Jujib Curdiu |urik io-2i




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Letter of 1ransm|tta|
Finance Department
Jagannath University,Dhaka
1
Lh
uecember 2011
Suborna 8arua
!agannaLh unlverslLy
uhaka
Sub Submlsslon of AsslgnmenL
uear Slr
ere ls Lhe reporL on 1he currenL slLuaLlon of hlllps curve of 8angladesh and a dlscusslon on
lL" prepared based research We have Lrled our besL efforL Lo gaLher all necessary lnformaLlon
Lo Lhe concenLraLed parL of Lhe reporL
Lo enrlch lL We belleve LhaL wlLh our llmlLed knowledge Lhls reporL provldes a core concepL
abouL Lhe lnverse relaLlon of Lhe wage lnflaLlon and unemploymenL and also Lo know Lhe
currenL economlc condlLlon of our counLry
We Lrled our level besL Lo puL meLlculous efforL for preparlng Lhe reporL Any shorLcomlngs or
flaws may arlse as we are very novlce ln Lhls aspecL We wlll wholehearLedly welcome any
clarlflcaLlon and suggesLlon abouL any vlew and concepLlon dlssemlnaLed ln our reporL

?ours falLhfully
Md !ahld assan
(Cn behalf of group 088)
4
Lh
8aLch
ueparLmenL of llnance


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Acknow|edgement
llrsL of all we would llke Lo be graLeful Lo Allah and my parenLs and pay my deepesL respecL Lo
Mr Suborna 8arua lecLurer ueparLmenL of llnance !agannaLh unlverslLy uhaka due Lo her
generous and frlendly guldance 1he faculLy of 8uslness SLudles helps us Lo geL Lhe opporLunlLy
Lo undersLand some mlnuLe lssues as well as Lhose lssues whlch we have falled Lo undersLand
We also would llke Lo Lhanks Lhose people for glvlng us enormous help LhaL can'L be menLloned
ln Lhls shorL exLenL


ecut|ve summary


lnflaLlon and unemploymenL are Lhe Lwo closely waLched lndlcaLors for evaluaLlng Lhe
macroeconomlc performance of a counLry 1here exlsLs a negaLlve assoclaLlon beLween Lhe
lnflaLlon raLe and Lhe unemploymenL raLe accordlng Lo Lhe arLlculaLlon of AW hlllps lL shows
LhaL lf lnflaLlon ls low unemploymenL raLe ls hlgh and lf lnflaLlon ls hlgh unemploymenL raLe
should be low 1hls relaLlonshlp ls known as 1he hlllps Curve" LaLer Samuelson and Solow
also supporLed LhaL Lhe pollcymakers face a Lradeoff beLween lnflaLlon and unemploymenL
and Lhe hlllps curve lllusLraLes LhaL Lradeoff 8uL Lhe daLa of 8angladesh ln recenL years
descrlbes a dlfferenL plcLure Lhan Lhe flndlngs of hlllp
1he lnflaLlon raLe of 8angladesh ln Lhe lasL flve years sLarLlng from l? 200403 ls above 6
percenL and lf Lhe Lrends conLlnuous llke Lhls Lhe alm of Lhe governmenL Lo achleve 8 percenL
growLh raLe of Cu by l? 2013 may be hlndered by Lhe lncreaslng raLe of lnflaLlon and
lncreased prlce varlablllLy
ln 8angladesh raLe of unemploymenL ls lncreaslng along wlLh lncreaslng raLe of lnflaLlon from
l? 200306 and Lhus Lhe relaLlonshlp beLween lnflaLlon and unemploymenL has become
poslLlve 1hus Lhe economy of 8angladesh ls golng Lowards a Lwoway Lrap as hlgh lnflaLlon ls
creaLlng lncome eroslon and lncreaslng unemploymenL raLe ls prevenLlng access of general
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people lnLo lncome source Cn an average workers are loslng 1k 38404 per monLh of Lhelr
nomlnal earnlngs due Lo Lhe effecLs of lnflaLlon ln 2009 (Llll !une) uecreaslng scope of
employmenL ls lncreaslng Lhe poverLy slLuaLlon and creaLlng lnequallLy 1herefore poor people
are faced wlLh a Lwln pressure of loss of lncome and scope of geLLlng employed
lf raLe of unemploymenL cannoL be reduced Lo 43 Lhe LargeL of Lhe governmenL Lo achleve
Lhe Cu growLh raLe of 8 percenL may be hlndered because a LoLal of 1k 338 bllllon of ouLpuL
would be less produced beLween l? 2011 Lo l? 2013 due Lo hlgher raLe of unemploymenL As a
consequence of rlslng unemploymenL Lhe loss of ouLpuL mlghL be 1k 11936 bllllon per annum
on average ln Lhe upcomlng flve years


1A8L CI CCN1N1S


NAME Page no
EXECUTIVE SUMMARY
CHAPTER - 01
INTRODUCTION 1
1.1 ntroduction
1.2 Rational oI the study
1.3 Objectives oI the report
1.4 Scope the study
1.5 Methodology oI the study
1.6 Limitations oI the study
CHAPTER - 02
Body Of The Report
Unemployment
price nIlation
Wage nIlation
Philips Curve




CHAPTER - 03
Conclusion

Appendix

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Bibliography




Contents of 1ab|es Graphs and I|owcharts
TABLE NO NAME Page No
2.1 7
3.1 11
GRAPH NO NAME Page No
2.1 8
3.1 13
3.2 14
FLOWCHART
NO
NAME
4.1 24
4.2 25

chopter01
Introduct|on

.IntroJuctlon
ln 1938 AWhlllps Lhen a professor aL Lhe London School of Lconomlcs' publlshed a
comprehenslve sLudy of wage behavlor ln Lhe unlLed klngdom for Lhe years 18611937
1he maln flndlng ls Lo dlscover Lhe lnverse relaLlonshlp beLween Lhe raLe of unemploymenL
and Lhe of lncrease ln money wages 1he hlgher Lhe raLe of unemploymenL Lhe lower Lhe
raLe of wage lnflaLlon 1he currenL raLe of lnflaLlon ls alarmlng for 8angladesh Any lnflaLlon
raLe exceedlng Lhe boundary ls always unpredlcLable Lherefore requlres approprlaLe Lools
Lo work on lL When a counLry suffers from lnflaLlon Lhe flrsL Lool LhaL pollcymakers look
for ls Lhe hllllps curve unforLunaLely Lhere ls no welldeflned work on Lhe hllllps curve
for 8angladesh
We have Lrled Lo focus on Lhe lmporLance of hlllps curve lL measurers how affecLs ln
8angladesh economlcs 1hls model ls followed by mosL of Lhe modern counLry 1hey use lL
Lo reduce Lhelr unemploymenL and lnflaLlon ln a subsLance level
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Cur focuses ls on LhaL polnL Cur goal ls also LhaL







Rationale of the Study
As oui couise teachei has given to piepaie this assignment, we have tiieu oui level
best to piepaie it.
o know about how to make a Philips cuive.
o know how we can eliminate the inflation anu unemployment.
o compaie the cuiient economic conuition of oui countiy with anothei countiy.
o inciease oui piofessionalism in job sectoi.
o know the ielationship of wage inflation with unemployment.


- O-ective of the Report
Primary Objectives
We have done Lhls reaches because our course Leachers gave Lhls Loplc as our asslgnmenL 1he
prlmary ob[ecLlve of Lhls reporL ls LhaL As he declded us Lo make Lhls asslgnmenL we have Lrled
our besL Lo make lL relevanL We have Lrled our besL Lo prepare Lhls asslgnmenL perfecLly and
correcLly lf our course Leacher saLlsfled our prlmary ob[ecLlve wlll be successful.


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Secondary Objective
knowlng Lhe currenL slLuaLlon of unemploymenL of 8angladesh
ow much lnflaLlon occurred ln Lhe lasL few years
o measuie the veiification of wage inflation in cuiient yeai of oui countiy.
elationship of wage with unemployment.
elationship of piice with unemployment.
o analysis the cuiient economy maiket of Banglauesh.
athei piactical knowleuge about how to iemove inflation anu unemployment.



Scope of the Study
1here was huge scope Lo work ln Lhe arena of Lhe reporL Conslderlng Lhe dead llne Lhe scope
and exposure of Lhe paper has been wlderanglng 1he sLudy %he current situation oI Philips
curve oI Bangladesh and a discussion on it" has covered overall plcLure of currenL wage
lnflaLlon prlce lnflaLlon unemploymenL of 8angladesh and Lhe LoLal economlc poslLlon of our
counLry 8y preparlng Lhls reporL lL becomes more undersLandable abouL Lhe real economlc
condlLlon and slLuaLlon of our counLry

15 ethodology
MeLhodology ls Lhe process or purpose of collecLlng daLa and lnformaLlon whlch are requlred
ln
ConnecLlng wlLh flndlngs Lools for besL posslble ouLcome
1here are varlous approaches Lo collecL daLa for Lhe reporL 8uL we should carefully selecL Lhe
way accordlng Lo naLure of Lhe reporL We have deslgned Lhe sLudy carefully planned Lo yleld
resulL LhaL are ob[ecLlve as posslble 1he maln lookouL Lhe reporL ls Lo dlscover Lhe real hlllps
curve of our currenL economlc condlLlon ln Lhls secLlon we would llke Lo emphasls on survey
process LhaL we have conducL whlle we were preparlng Lhe reporL

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imitations
We have Lrled our besL Lo prepare Lhls reporL perfecLly 8uL we are noL compleLely saLlsfled We
have faced many problems 1hese problems have glven us a loL of paln Cur Llme was very
much llmlLed lf gave us some exLra Llme Lhe reporL mlghL beLLer
Some problems/ llmlLaLlons were yeL presenL Lhere
Lack of Lxperlence 1he work of collecLlng Lhe lnformaLlon requlres much experlence 8uL
we had no adequaLe ldea knowledge and prevlous experlence abouL Lhe reporL
1herefore lL ls very normal LhaL error comes lnLo exlsLence ln Lhe reporL

1lme llmlLaLlon 1he Llme llmlLaLlon ls one of Lhe llmlLaLlons of Lhls reporL We have Lo
compleLe Lhls reporL wlLhln very shorL Llme

Lack of faclllLles provlded by Lhe managemenL AL Lhe Llme of daLa collecLlon we have
faced
Several problems due Lo lack of faclllLles by Lhe managemenL

Lack of lnLeresL AL Lhe Llme of daLa collecLlon lL has been observed LhaL mosL of Lhe
parLlclpanLs of Lhe lnLervlew dld noL pay aLLenLlon ln answerlng Lhe quesLlon

Lack of lnformaLlon 1he Company ls world renowned company 8uL our reporL was only ln
uhaka blased So Lhe reporL lacks lnformaLlon






chopter 2
Unemployment


Wllllng Lo work and have Lhe physlcal and menLal ablllLy Lo work desplLe all of Lhese lf anyone
does noL geL Lhe opporLunlLy Lo work ls called unemploymenL ln a word ln economlcs
unemploymenL ls consldered from Lwo dlfferenL polnLs of vlew such as volunLary and
lnvolunLary employmenL ln economlcs lnvolunLary unemploymenL ls called Lhe acLual
unemploymenL 1hough Lhere have been several deflnlLlons of volunLary and lnvolunLary
unemploymenL ln Lhe economlcs llLeraLure a slmple dlsLlncLlon ls ofLen applled volunLary
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unemploymenL ls aLLrlbuLed Lo Lhe lndlvlduals declslons whereas lnvolunLary unemploymenL
exlsLs because of Lhe socloeconomlc envlronmenL (lncludlng Lhe markeL sLrucLure governmenL
lnLervenLlon and Lhe level of aggregaLe demand) ln whlch lndlvlduals operaLe ln Lhese Lerms
much or mosL of frlcLlonal unemploymenL ls volunLary slnce lL reflecLs lndlvldual search
behavlor volunLary unemploymenL lncludes workers who re[ecL low wage [obs whereas
lnvolunLary unemploymenL lncludes workers exclLed due Lo an economlc crlsls lndusLrlal
decllne company bankrupLcy or organlzaLlonal resLrucLurlng
Accordlng Lo a sLudy of Lhe lnLernaLlonal Labor CrganlzaLlon (lLC) Lhe raLe of growLh of
unemploymenL ln 8angladesh was 19 percenL ln Lhe decade of Lhe nlneLles

8uL Lhe growLh ln unemploymenL currenLly ls 37 percenL 1he lLC flgures also show 8angladesh
ln Lhe LwelfLh poslLlon among Lhe Lop LwenLy counLrles ln Lhe world where unemploymenL ls
rlslng 1he number of Lhe unemploymenL ln 8angladesh now ls esLlmaLed aL 30 mllllon

1he way Lhe raLe of unemploymenL ls lncreaslng lL ls feared LhaL aL Lhls raLe unemploymenL
would soar Lo some 60 mllllon by 2013 Accordlng Lo anoLher esLlmaLe every year some 27
mllllon young persons are becomlng ellglble for [obs whereas only abouL 07 mllllon of Lhem are
geLLlng
Workless

1he number of Lhe dlsgulsed unemployed an economlc meanlng underemployed people or
employed Lo a degree less Lhan Lhelr poLenLlal ls some 32 per cenL

1hese flgures however excluded Lhe female force engaged ln acLlvlLles llke poulLry llvesLock
paddy husklng preservaLlon of food eLc conducLed ln rural households and consldered as
domesLlc work raLher Lhan economlc acLlvlLles 1he 199396 esLlmaLed Lhe female parLlclpaLlon
raLe aL 181

ueflnlng unemploymenL also lnvolves a complex exerclse ln Lhe ln 8angladesh ere
unemploymenL dlsgulsed unemploymenL and self unemploymenL are found Lo be equaLed
wlLh employmenL 1haL ls why lL ls very dlfflculL Lo ldenLlfy Lhe real exLenL of unemploymenL ln
8angladesh

owever Lhe hard facLor ls LhaL a large percenLage of workforces ln Lhe counLry remaln
unemploymenL ln addlLlon a very large number of young people are enLerlng Lhe [ob markeL
every year whlle Lhe economy ls unable Lo creaLe enough new [obs Lo cope wlLh lL 1hus Lhe
problem conLlnuous Lo aggravaLe

1he large number of unemploymenL people ln Lhe workforce glves an ldea of Lhe dependency
raLlo lmplylng LhaL Lhe supporL LhaL Lhe employed or acLlvely engaged people ln lncome
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generaLlng economlc acLlvlLles have Lo provlde ln one way or oLher Lo Lhese belonglng Lo Lhe
worklng age populaLlon who are unemployed or under employed
1he unemployed people ln conLrasL only llve off Lhe economy or Lhelr famllles and socleLy
1hey Lurn ouL Lo be an economlc burden 1hls ls noL any dellberaLe cholce on Lhls parL 1hls ls
Lhe slLuaLlon Lhey are forced Lo accepL because of Lhe lack of employmenL opporLunlLles 1hey
are a very poLenL source of Lenslon 1he llnkage beLween unemploymenL and crlme ls also
obvlous

Causes of Unemp|oyment In 8ang|adesh
1here are varlous causes of unemploymenL ln 8angladesh LhaL lead our counLry Lo a mlserable
slLuaLlon 1he reasons behlnd unemploymenL ln 8angladesh are descrlbed below
1) 1echno|og|ca| keason uue Lo Lhe advancemenL of Lechnology Lhe usage of human
worker ls decreaslng day by day As a resulL unemploymenL raLe ls lncreaslng ln a
slgnlflcanL raLe
2) Seasona| keason Seasonal reason ls a slgnlflcanL reason of unemploymenL ln
8angladesh 1here ls a Llme Lo reap Lhe crops and Lhen Lhere appear acuLe shorLage of
worker Cn Lhe oLher hand when Lhe season goes Lhen Lhe workers are unemployed
3) ducat|ona| keason LducaLlon sysLem ls defecLlve ln 8angladesh 1here ls a llLLle
opporLunlLy Lo learn Lechnlcal knowledge LhaL's why mosL of our sLudenLs do noL geL
Lhelr expecLed [ob
4) kap|d Increase In opu|at|on 1he more Lhe populaLlon ls lncreased Lhe less Lhe
opporLunlLy Lo geL Lhe [ob ls decreased 1he populaLlon ls lncreaslng ln a hlgh raLe raLher
Lhan Lhe [ob secLor
3) Lack|ng of 1echn|ca| know|edge uue Lo laclng of Lechnlcal knowledge mosL of Lhe
people do noL geL Lhe expecLed [ob
6) Soc|a| keason Soclal reason ls also responslble behlnd unemploymenL ln 8angladesh
AbouL half of our LoLal populaLlon ls women who are rellable on men 1haL's why
unemploymenL raLe ls lncreaslng ln a slgnlflcanL raLe
7) Unrest In Industr|a| Sector uue Lo creaLlon of unresL ln lndusLrlal secLor many lndusLry
ls belng closed And consequenLly Lhe workers are becomlng unemployed
8) L|tt|e Scope 1o Work Ior Women 1here ls a llLLle scope Lo work ln an organlzaLlon for
Lhe women due Lo soclal and rellglous reason lor Lhese Lhe unemploymenL raLe ls
lncreaslng ln 8angladesh
9) Natura| D|saster naLural dlsasLer ls a common maLLer of 8angladesh naLural dlsasLer ls
occurred ln 8angladesh ln common lnLerval 1haL ls why Lhere ls greaL damages ln crops
and Lhe farmers become unemployed
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10)Unsk|||ed Manpower lL ls a reasonable cause behlnd unemploymenL MosL of Lhe
people of 8angladesh ls unskllled So Lhey cannoL do Lhe work properly As a resulL
people are reLLlng unemployed
11)Low kate of Cap|ta| Accumu|at|on 1here ls a llLLle scope of caplLal accumulaLlon ln
8angladesh So Lhere ls llLLle chance of new employmenL lnfrasLrucLure and lndusLry
are noL belng bullL LhaL's why unemploymenL raLe ls lncreaslng ln 8angladesh
AL lasL we can say LhaL above reasons ls playlng an lmporLanL role behlnd unemploymenL ln
8angladesh
ffect of Unemp|oyment In 8ang|adesh
unemploymenL has some several negaLlve effecLs on a economy and Lhe counLry as well lor
Lhe unemploymenL problem noL only an lndlvldual buL also a socleLy suffers a loL erslsLenLly
hlgh unemploymenL creaLes huge cosLs for lndlvlduals and for Lhe economy as a whole Some of
Lhese cosLs are dlfflculL Lo value and measure especlally Lhe longerLerm soclal cosLs
1) Loss of |ncome unemploymenL normally resulLs ln a loss of lncome 1he ma[orlLy of
Lhe unemployed experlence a decllne ln Lhelr llvlng sLandards and are worse off ouL of
work 1hls leads Lo a decllne ln spendlng power and Lhe rlse of falllng lnLo debL
problems 1he unemployed for example may flnd lL dlfflculL Lo keep up wlLh Lhelr
morLgage repaymenLs
2) Negat|ve mu|t|p||er effects 1he closure of a local facLory wlLh Lhe loss of hundreds of
[obs can have a large negaLlve mulLlpller effecL on boLh Lhe local and reglonal economy
Cne person's spendlng ls anoLher's lncome so Lo lose wellpald [obs can lead Lo a drop ln
demand for local servlces downward pressure on house prlces and 'secondround
employmenL effecLs' for buslnesses supplylng Lhe facLor or planL LhaL closed down
3) Loss of nat|ona| output unemploymenL lnvolves a loss of poLenLlal naLlonal ouLpuL and
ls a wasLe of scarce resources lf some people choose Lo leave Lhe labor markeL
permanenLly because Lhey have losL Lhe moLlvaLlon Lo search for work Lhls can have a
negaLlve effecL on long run aggregaLe supply and Lhereby damage Lhe economy's
growLh poLenLlal When unemploymenL ls hlgh Lhere wlll be an lncrease ln spare
capaclLy ln oLher words Lhe ouLpuL gap wlll become negaLlve and Lhls can have
deflaLlonary forces on prlces proflLs and ouLpuL
4) I|sca| costs 1he governmenL loses ouL because of a fall ln Lax revenues and hlgher
spendlng on welfare paymenLs for famllles wlLh people ouL of work 1he resulL can be an
lncrease ln Lhe budgeL deflclL whlch Lhen lncreases Lhe rlsk LhaL Lhe governmenL wlll
have Lo ralse LaxaLlon or scale back plans for publlc spendlng on publlc and merlL goods
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14
3) Soc|a| costs 8lslng unemploymenL ls llnked Lo soclal deprlvaLlon lor example Lhere ls a
relaLlonshlp wlLh crlme and soclal dlsrupLlon lncludlng lncreased dlvorce raLes
worsenlng healLh and lower llfe expecLancy
6) 1he lmpacL of hlgh unemploymenL on human caplLal / labor producLlvlLy
7) lL lncreases Lhe pool of avallable labor for buslnesses wanLlng Lo expand and Lake on
more workers
8) Lxperlence of unemploymenL mlghL prompL some people Lo become self employed and
sLarL Lhelr own buslnesses
9) SLrucLural problems caused by occupaLlonal and geographlcal lmmoblllLy of labor
As a resulL of unemploymenL we lose our money our famlly canL eaL we canL pay Laxes and
we canL buy or renL anyLhlng and of course LhaLs noL counLlng gas so we need Lo geL a [ob as
soon as we can Lo survlve!


Steps to be taken to remove unemp|oyment
1he govL wlll need Lo work effeclenLly Lo make a denL ln Lhe masslve unemploymenL
problem sooner raLher Lhan laLer
lor LhaL maLLer lLs prlme Lask should be Lo facclllLaLe and ralse Lhe level of lnveasLmenL
Lach of Lhe consLralns now lmpendlng acLual lnvesLmenL acLlvlLles has Lo be addressed
1he overal lnvesLmenL cllmaLe boLh for local and forelgn lnvesLors" ln Lhe counLry has
Lo be lmproved
1here ls also a need Lo be clear abouL Lhe pollcles Lo be pursued Lo creaL employmenL
opporLunlLles
new enLerprlse LhaL wlll absorb Lhe unemploymenL ln an lncraslng number parLlcularly
Lhe labor lnLenslve ones should be ldenLlfled
8y bulldlng and operaLlng a large number of Lranlng lnsLlLuLlons Lhe govL can also make
a blg conLrlbuLlon Lowards maklng Lhe workforce more sulLable for employmenL and
producLlve secLors
Such lnsLlLuLlons wlll be able Lo help Lo Lraln Lhe unemployed people ln dlfferenL
vocaLlons
ln Lhls conLexL governmenL's adequaLe spendlng for sklll developlng ls vlLal
1hls wlll ln Lurn accelereLe Lhe pace of economlc acLlvlLles on a susLalned basls ln order Lo
make Lhe deslred lmpacL on Lhe unemploymenL slLuaLlon

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13
13 ?ears uaLa of unemploymenL are glven below
Serlal no ?ear unemploymenL 8aLe
1 1996
3320
2 1999
43
3 2000
3320
4 2001
3320
3 2002
4000
6 2003
4000
7 2003
4000
8 2006
230
9 2007
230
10 2008
230
11 2009
230
12 2010
310


rce lLC
88S
lA1 8CCk




0
3
10
13
20
23
30
33
40
43
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Serles1
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16
1rend L|ne Ana|ys|s Irom n|stor|ca| erspect|ve

ln 1999 Lhe raLe of unemploymenL was reduced because govL and some prlvaLe
organlzaLlon Look some congenlal pollcy regardlng unemploymenL ln 8angladesh
ln 2000 Lhe unemploymenL was hlgh because female workers was decreased
slgnlflcanLly
ln 20032003 unemploymenL raLe was sLable aL 4000 percenL because some
expanslonary pollcy wss Laken and prlvaLe organlzaLlon expanded and creaLed a huge
scope of unemploymenL
ln 2006 unemploymenL was decreased because [ob opporLunlLy was ceeaLed ln a large
volume
ln Lhe year of 20062008 unemploymenL raLe was sLable aL 23 percenL buL lnflaLlon
lncreased because of expanslonary pollcy
ln Lhe year of 2009 unemploymenL raLe was sLable buL lnflaLlon raLe decreased because
of conLarcLlonary pollcy
ln 2010 unemploymenL raLe lncreased and lnflaLlon raLe decreased So lL ls
conLarcLlonary pollcy



Inf|at|on

1he lnflaLlon raLe on a polnLLopolnL basls ln 8angladesh reached 1121 percenL ln november
lasL year Lhe hlghesL ln 17 years local newspaper 1he ually SLar reporLed 1hursday Accordlng
Lo 8angladesh 8ureau of SLaLlsLlcs (88S) Lhe lnflaLlon raLe has seen a sLeady rlse over Lhe lasL
few years and lL reached Lhe LwodlglL flgure ln !uly lasL year
ln CcLober 2007 Lhe lnflaLlon raLe was 1006 percenL and lL reached 1121 percenL ln
november up 113 percenLage polnLs 1he lnflaLlon on food lLems ln november also lncreased
Lo 1380 percenL from CcLobers 1173 percenL accordlng Lo Lhe 88S daLa 1he lnflaLlon raLe on
food lLems crossed Lhe 11 percenL mark ln !uly lasL year and showed a sLeady rlse unLll CcLober
1hen lL had a blg lncrease ln november owever Lhe lnflaLlon raLe on nonfood lLems
decreased by 017 percenLage polnLs lL was 723 percenL ln november lasL year and 742 ln
CcLober roducLlon losses due Lo naLural calamlLles have added Lo Lhe lnflaLlonary pressure
and Lhe average lnflaLlon raLe may be ln Lhe range of 81 and 83 percenL ln Lhe currenL flscal
1ype LexL


17
year (from !uly 2007 Lo !une 2008) Lhe reporL says 1he average lnflaLlon raLe ln Lhe lasL flscal
year was 72 percenL Sources sald Lhe average lnflaLlon raLe of Lhe currenL flscal year may
exceed Lhe predlcLed flgure by Lhe 8angladesh 8ank


Recent Inflation in Bangladesh: Trends, Determinants and Impact
on Poverty

1he presenL volume LlLled 8ecenL lnflaLlon ln 8angladesh 1rends ueLermlnanLs and lmpacL on overLy
capLures Lhe flndlngs of Lwo recenL sLudles compleLed under Lhe lndependenL 8evlew of 8angladeshs
uevelopmenL (l88u) programme by Lhe CenLre for ollcy ulalogue (Cu) on lnflaLlon ln 8angladesh As
ls known prlce hlke of essenLlal commodlLles has been a ma[or concern ln 8angladesh boLh for Lhe
pollcymakers and Lhe publlc aL large ln 2007 (March!une) Cu carrled ouL a sLudy LlLled rlce of
LssenLlal CommodlLles A ulagnosLlc SLudy of 8ecenL 1rends Lo lnvesLlgaLe Lhe underlylng facLors
conLrlbuLlng Lo lnflaLlon ln 8angladesh whlch was gradually galnlng momenLum aL Lhe Llme 8ased on
value chaln analysls of a number of essenLlal lLems Lhe Cu sLudy ldenLlfled Lhe key reasons (boLh
domesLlc and lnLernaLlonal) whlch fuelled Lhe lnflaLlonary pressure and puL forward suggesLlons for
lnLervenLlon by Lhe governmenL Lo mlLlgaLe Lhe slLuaLlon lnflaLlon ln 8angladesh galned furLher energy
ln 2008 wlLh consequenL adverse lmpllcaLlons on purchaslng power and poverLy levels ln 8angladesh 1o
examlne Lhese more recenL developmenLs Cu conducLed anoLher sLudy as a followup of Lhe
aforesald dlagnosLlc sLudy whlch was LlLled 1rends ln rlces and lnflaLlon lmpacL on 8eal lncome and
overLy ln 8angladesh 1hls sLudy Lraced more recenL Lrends ln aggregaLe lnflaLlon levels and analysed
movemenLs ln prlce levels of a number of essenLlal lLems of consumpLlon 1hls sLudy also looked aL
8angladeshs lnflaLlon from a reglonal comparaLlve perspecLlve made an aLLempL Lo esLlmaLe Lhe
lmpacL of lnflaLlon on poverLy levels based on laLesL household lncome and expendlLure daLa and
revlewed varlous governmenL lnLervenLlons Lo address boLh causes and consequences of lnflaLlon
lL ls hoped LhaL Lhe book wlll be of lnLeresL Lo Lhose who have professlonal and pollcy lnLeresL ln
undersLandlng Lhe naLure and depLh of recenL lnflaLlon and ln deslgnlng approprlaLe pollcy responses Lo
mlLlgaLe Lhe slLuaLlon lL ls also hoped LhaL Lhe volume wlll also be of lnLeresL Lo Lhe general readershlp
who are concerned wlLh rlslng prlce levels ln 8angladesh and would llke Lo have a more lndepLh
undersLandlng abouL Lhe naLure causes and consequences of lnflaLlon ln Lhe 8angladesh conLexL
ln economlcs lnflaLlon ls a rlse ln Lhe general level of prlces of goods and servlces ln an
economy over a perlod of Llme When Lhe general prlce level rlses each unlL of currency buys
fewer goods and servlces ConsequenLly lnflaLlon also reflecLs eroslon ln Lhe purchaslng power
of money a loss of real value ln Lhe lnLernal medlum of exchange lnflaLlon's effecLs on an
economy are varlous and can be slmulLaneously poslLlve and negaLlve negaLlve effecLs of
lnflaLlon lnclude a decrease ln real value of money and oLher moneLary lLems over Llme As a
resulL of lnflaLlon Lhere may be a shorLage of goods lf consumers begln hoardlng ouL of concern
LhaL prlces wlll lncrease ln Lhe fuLure 1hus we can summarlze lnflaLlon ln a nuLshell
1ype LexL


18
8ANGLADSn INILA1ICN kA1
1he lnflaLlon raLe ln 8angladesh was lasL reporLed aL 113 percenL ln AugusL of 2011 1hls page
lncludes a charL wlLh hlsLorlcal daLa for 8angladeshs lnflaLlon 8aLe lnflaLlon raLe refers Lo a
general rlse ln prlces measured agalnsL a sLandard level of purchaslng power 1he mosL well
known measures of lnflaLlon are Lhe Cl whlch measures consumer prlces and Lhe Cu
deflaLor whlch measures lnflaLlon ln Lhe whole of Lhe domesLlc economy

Causes of Inf|at|on |n 8ang|adesh
1here are several causes of lnflaLlon ln 8angladesh 1he reasons behlnd lnflaLlon are glven
below
1) r|ce n|ke |n Internat|ona| Market Cne of Lhe causes of lnflaLlon relaLes Lo food prlces
ln Lhe lnLernaLlonal markeL 8angladesh belng a food lmporLlng counLry any rlse ln food
prlces ln Lhe world markeL can push up Lhe domesLlc prlces of Lhose commodlLles So we
can say LhaL lncrease ln prlce level of lnLernaLlonal markeL dlrecLly or lndlrecLly affecLs
our counLry's prlce level
2) cess Increase In GD 8angladesh has been performlng well ln Lerms of economlc
growLh over Lhe lasL 10 years lLs Cu ls noL very small 1haL ls why we can lnfer LhaL
hlgh growLh raLe of Cu and Lhe per caplLal Cu ln parLlcular has led Lo Lhe creaLlon of
excess demand ln Lhe 8angladesh economy 1hls has resulLed ln a demand full lnflaLlon
3) 1he growth of money supp|y SomeLlme 8angladesh 8ank supply money wlLhouL any
raLlonal cause LhaL lead Lo lnflaLlon lrrelevanLly So lL ls a very lmporLanL lssue Lo conLrol
money supply Lo Lhe markeL
4) 8angladesh Laka has depreclaLed Lo some exLenL agalnsL lLs lnLervenLlon currency uS
dollar over Lhe pasL several years 8uL Lhe lndlan rupee has depreclaLed hlgher Lhan
LhaL As a resulL Lhe relaLlve poslLlon of 8angladesh currency has suffered havlng lLs
lmpacL on Lhe economy lndla ls 8angladesh's ma[or source of lmporL And lL ls essenLlal
reason of lnflaLlon ln 8angladesh
3) k|se In Import cost lf Lhe lmporL cosL for 8angladesh ls affecLed by Lhe cross currency
exchange raLes Lhls affecLs Lhe prlces Any movemenL of prlces ln Lhe upward dlrecLlon
lndlcaLes Lhe depreclaLlon of Laka relaLlve o Lhe currency ln quesLlon afLer ad[usLlng for
lnflaLlon lor Lhls reason prlce level lncreases and lnflaLlon ls occurred
6) Increase |n Iue| r|ces luel prlces ls yeL anoLher facLor LhaL ls clLed Lo have a ma[or
lmpacL ln Lhe domesLlc prlce slLuaLlon lf Lhe fuel prlces go up LhaL lmpacL Lhe prlces of
commodlLles of boLh agrlculLural producLlon and LransporLaLlon
1ype LexL


19
7) 1he noncompet|t|ve market features SomeLlme buslness men creaLe a syndlcaLe Lo
make lllegal proflL 1hrough syndlcaLe Lhe prlce of commodlLles ls flxed and ulLlmaLely
prlce hlke ls creaLed LhaL leads Lo lnflaLlon
8) owever Lhere ls yeL no convlnclng concreLe evldence of syndlcaLes belng ln LoLal
conLrol of Lhe markeLs of essenLlal commodlLles Lo Lake advanLage of Lhe weak
consumer proLecLlon laws owever some shorLLerm alllances among Lhe suppllers of
such goods ls noL Lo be rule ouL Lo have some lnfluence over supply and prlces 1hls may
have some lmpacL on Lhe rlslng prlces of essenLlal lLems
9) 1hen Lhe lssue of growLh of remlLLances and lLs llnks wlLh lnflaLlon come 1here has
been a sLeady and subsLanLlal rlse ln remlLLance lnflow over Lhe lasL few years Such
lnflow does no doubL conLrlbuLe Lo demandpull lnflaLlon ln 8angladesh Worklng as
Lhe 8lslng rosperlLy ypoLhesls such demandpull facLors can push up prlces 8uL
lncreased remlLLance lnflow alone ls unllkely Lo be a ma[or cause of lnflaLlon 1hls ls so
because Lhe rlse ln demand has been supporLed by Lhe rlse ln supply Lhrough lncreased
lmporLs
10)1here ls excesslve expendlLure ln govL budgeL LhaL leads Lo lnflaLlon
11)SomeLlme commerclal banks of 8angladesh provldes excess loan Lo unproducLlve secLor
LhaL ls why lnflaLlon ls occurred
12)8educLlon of producLlon also responslble for lnflaLlon
13)lncrease ln wage also responslble for lnflaLlon
14)naLural dlsasLer damages a loL of an economy LhaL leads Lo lnflaLlon
13)Changes of salary scale of workers and employee also a reasonable cause Lo lnflaLlon
ffect Cf Inf|at|on In 8ang|adesh
1here are varlous effecLs of lnflaLlon ln 8angladesh 1haL ls glven below
A) ffect on product|on and emp|oyment 1he effecL of lnflaLlon on producLlon and
employmenL ls as follows
1) lor lncreaslng prlce level savlngs ls decreased as a resulL caplLal accumulaLlon of a
counLry ls hampered
2) As resulL on lnflaLlon sLock buslness ls appreclaLed and consequenLly real
producLlon as well as lnvesLmenL ls depreclaLed
3) lnflaLlon helps Lo lncrease black markeL So lnvesLmenL and producLlon are
decreased and Lendency of Laklng rlsk ls also decreased LhaL ulLlmaLely hampers an
economy a loL
4) As a resulL of lnflaLlon lncome ls lncreased and Lendency Lo use of luxurlous goods ls
also lncreased so LhaL producLlon of unnecessary goods ls lncreased raLher Lhan
necessary goods
1ype LexL


20
3) uue Lo lnflaLlon workers demand more wage and LhaL's why vlolence may be
creaLed ln an organlzaLlon As a resulL producLlon may be hampered

1hus because of lnflaLlon producLlon and lnvesLmenL are lncreased aL flrsL buL
ulLlmaLely savlngs lnvesLmenL producLlon and employmenL are decreased ln long
run
8) ffect Cn D|str|but|on uue Lo lnflaLlon resources are reallocaLed among Lhe dlfferenL
classes of socleLy And for Lhls reason somebody ls galner and somebody ls loser 1he
effecLs of lnflaLlon on dlsLrlbuLlon are as follows
1) roducer Class ln shorL run producers' make proflL from producLlon 8ecause mosL
of Lhe Llme lncremenL of producLlon cosL ls less Lhan Lhe lncremenL of prlce
2) lnvesLors Share lnvesLors galn from lnflaLlon 8ecause prlce of share and caplLal are
lncreased due Lo lnflaLlon so company make proflL from lnflaLlon and company pays
more dlvldend Lo Lhe shareholder
3) uue Lo lncrease ln agrlculLural commodlLles rlch farmers galn more and poor farmer
loss a loL because lL ls noL posslble Lo lncrease producLlon ln shorL run
4) SLock buslnessmen black markeLer galn a loL from lnflaLlon
3) AL Lhe Llme of lnflaLlon credlL provlder ls Lo loss and aL Lhe same Llme credlL holder ls
beneflLed
6) 1ax provlder ls also Lhe galner of lnflaLlon because he ls Lo pay more Lax buL
lncremenL of goods ls more Lhan LhaL of Lax paymenL
C) ffect on ub||c Income pend|ture 1here are loLs of effecL on publlc lncome AL
Lhe Llme of lnflaLlon publlc lncome ls lncreased and aL Lhe same Llme publlc
expendlLure ls also lncreased
D) ffect Cn Iore|gn 1rade 1here ls a huge probablllLy Lo lncrease off prlce of exporLable
goods So forelgn demand ls decreased due Lo lnflaLlon
AL lasL we can say LhaL lnflaLlon may congenlal Lo Lhe economlc growLh buL mosL of Lhe
cases lL ls noL posslble Lo conLrol lnflaLlon raLe So far as we all know LhaL lnflaLlon creaLes a
negaLlve lmpacL on all economy especlally varlous developlng counLrles llke 8angladesh
13 ?ears daLa of lnflaLlon 8aLe of 8angladesh

Serlal no ?ear lnflaLlon 8aLe
1 1996 2433
2 1997 4939
3 1998 8648
1ype LexL


21
4 1999 6179
3 2000 2483
6 2001 1908
7 2002 3719
8 2003 3361
9 2004 6103
10 2003 704
11 2006 677
12 2007 9109
13 2008 89
14 2009 3426
13 2010 8126

rce lLC
88S
lA1 8CCk


Above daLa are ploLLed ln Lhe MlcrosofL excel and Lhe Lrend llne ls glven below


1rend L|ne ana|ys|s Irom n|stor|ca| erspect|ve
0
1
2
3
4
3
6
7
8
9
10
1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Serles1
1ype LexL


22

ln 1991 and 1992 lendlng raLe was hlgh Lhen 1993 and 1993 So durlng 1993 and 1994 lL
decreased
ln 1993 govL lncreased money supply and LoLal domesLlc credlL so lnflaLlon lncreased
ln 1996 1998 and 1999 a low growLh raLe low producLlvlLy hlgh exchange raLe eLc
creaLed lnflaLlon
Larger depreclaLlon of exchange raLe was lncreased Lhe lnflaLlon raLe 2001 Lo 2003
ln 20012006 hlgh lnflaLlon ln food secLor aL lnLernaLlonal markeL was responslble for
varlaLlon of lnflaLlon
ln 2009 world oll prlce was lncreased so fasL So Lhe prlce of fuel and power also
lncreased lL also affecLs Lhe lnflaLlon of 8angladesh
ln 2010 global food prlce wenL uphlll so fasL 1hough Lhe lnflaLlon raLe decreased (34
percenL) Lhe prlce of food was noL responslble Lo Lhe normal people

What k|nd of Inf|at|on Is resent In 8ang|adesh
lL ls very dlfflculL Lo say LhaL whaL klnd of lnflaLlon ls presenL ln 8angladesh ln almosL every
counLry lL ls sald LhaL lncremenL of demand and cosL are responslble behlnd lnflaLlon uue Lo
heavy lncrease of populaLlon demand ls lncreaslng 8uL economlc growLh ls noL happenlng as
llke populaLlon for varlous obsLacles So demand full lnflaLlon ls occurred ln 8angladesh Cn Lhe
oLher hand because of lncreaslng prlce of producLlon equlpmenL cosL of producLlon ls also
rlslng As a resulL cosL push lnflaLlon ls happenlng ln 8angladesh So aL lasL we can lnfer from
Lhese LhaL demand full lnflaLlon cosL push lnflaLlon and budgeL orlenLed lnflaLlon are presenL ln
8angladesh



Wage Inf|at|on
1he relaLlon beLween rlce prlces and wage raLes ln 8angladesh

1ype LexL


23
1he relaLlon beLween rlce prlces and wage raLes parLlcularly wage raLes of unskllled laborers ls
of lmmense pracLlcal relevance Lo Lhe food pollcy debaLes of 8angladesh 1he ulLra poor ln
8angladesh earn mosL of Lhelr lncome from wages and Lhey spend abouL 60 percenL of Lhelr
lncome on food gralns 1herefore boLh Lhe wage raLe and Lhe rlce prlce are of crlLlcal concern
Lo Lhem ln Lhe pasL Lhe general argumenL agalnsL a hlgh prlce was Lhe conslderaLlon of
adverse lncome effecLs of such prlces on Lhe welfare of Lhe poor ln recenL years Lhls 1lne of
1ogl c has been counLered wlLh Lhe argumenL LhaL such adverse effecLs on Lhe poor are llmlLed
Lo Lhe shorL run ln Lhe long run Lhe poor also beneflL from hlgher rlce prlces due Lo Lhe
poslLlve re1aLlonshlp beLween wages and prlce of sLaples 1he search for a rellable answer Lo
Lhls lmporLanL quesLlon whlch ls so cenLral Lo Lhe prlce pollcy debaLes ln 8angladesh ls Lhe
prlmary ob[ecLlve of Lhe Lwo essays presenLed here
What |s the 8ang|adesh M|n|mum Wage?
8angladeshs Mlnlmum Wage ls Lhe lowesL amounL a worker can be legally pald for hls work
MosL counLrles have a naLlonwlde mlnlmum wage LhaL all workers musL be pald
1he 8angladesh mlnlmum wage ls 1800 Laka a monLh lL ls seL naLlonally every flve years by Lhe
naLlonal Mlnlmum Wage 8oard ln a LrlparLlLe forum lndusLry by lndusLry 8angladeshs
mlnlmum wage was lasL changed ln 2007
now does 8ang|adeshs m|n|mum wage compare to the m|n|mum wage |n other
countr|es?
8angladeshs yearly mlnlmum wage ls $79800 lnlotetootloool cotteocy lnLernaLlonal Currency
ls a measure of currency based on Lhe value of Lhe unlLed SLaLes dollar ln 2009 1here are
countr|es wlLh a hlgher Mlnlmum Wage Lhen 8angladesh and 8angladesh ls ln Lhe top S
percent of all counLrles based on Lhe yearly mlnlmum wage raLe
8angladesh has a governmenLmandaLed mlnlmum wage and no worker ln 8angladesh can be
pald less Lhen Lhls mandaLory mlnlmum raLe of pay Lmployers ln 8angladesh who fall Lo pay
Lhe Mlnlmum Wage may be sub[ecL Lo punlshmenL by 8angladeshs governmenL
8angladesh 8ureau of SLaLlsLlcs has consLrucLed a Wage 8aLe lndex uslng 196970 as Lhe base
year1he Wage 8aLe lndex from l? 199900 Lhrough l? 200809 ls presenLed ln 1able 33 lL has
been observed from Lhe Lable LhaL Lhe nomlnal wage raLe lndex ls rlslng conLlnuously and ln
l?200809 Lhe lndex rose by 1890 percenL compared Lo Lhe prevlous flscal year 1he lndlces of
all secLors exceeded by 13 percenL ln l? 200809 Cf Lhese wage raLe lndex of consLrucLlon and
agrlculLure secLors lncreased by 2147 percenL and 2128 percenL respecLlvely Compared Lo
Lhese secLors wage raLe lndlces of flsherles and lndusLry secLors are sllghLly lower buL have
been Lhe hlghesL ln Lhe recenL perlod lL ls Lo be noLed LhaL ln l?200809 Lhe wage raLe lndlces
of flsherles and lndusLry secLors lncreased by 1343 percenL and 1791 percenL respecLlvely

1ype LexL


24

llscal year 8eal wage raLe ln dlx (Ceneral)
19992000 234
20002001 331
20012002 4
20022003 846
20032004 333
20042003 203
20032006 000
20062007 067
20072008 267
20082009 1293

rce lLC
88S
lA1 8CCk





19992000 234
20002001 331
20012002 4
20022003 846
20032004 333
20042003 203
20032006 0
20062007 067
20072008 267
20082009 1292
2
0
2
4
6
8
10
12
14
0 2 4 6 8 10 12
Wage Inf|at|on
(Genera|)
1ype LexL


23







hlllps curves
1he re|at|onsh|p between pr|ce |nf|at|on and unemp|oyment
CharL of prlce lnflaLlon



1999 9 2000 9
2001 382002 38
2003 31
2004 36
2003 6
2006 7
2007 72
2008 91
0
1
2
3
4
3
6
7
8
9
10
1998 1999 2000 2001 2002 2003 2004 2003 2006 2007 2008 2009
r|ce Inf|at|on
1ype LexL


26

chort unemp/ment rote



N Phi//ips crve

1999 43
2000 332 2001 332
2002 402003 402004 402003 40
2006 232007 232008 23
1998 1999 2000 2001 2002 2003 2004 2003 2006 2007 2008 2009
Unemp|oyment kate
0
1
2
3
4
3
6
7
8
9
10
10 0 10 20 30 40 30
I
n
f
|
a
t
|
o
n

k
a
t
e
Unemp|oyment kate
Serles1
1ype LexL


27

xp/onotin
1he verLlcal axls explalns prlce lnflaLlon and horlzonLal axls deflnes unemploymenL raLe 1hls ls a
hlllps curve lf we explaln lL we wlll see ln 1999 Lhe unemploymenL raLe was 43 and Lhe prlce
lnflaLlon occurred 900 and ln 2000 Lhe unemploymenL raLe was 3320 when lnflaLlon was 900
We see LhaL Lhe hlllps curve ls noL perfecLly affecLs ln Lhls slLuaLlon ln 2001 Lhe
unemploymenL raLe was 3320 and prlce lnflaLlon was 38 We also can see durlng 2002
unemploymenL was 4000 and prlce lnflaLlon was 38 When unemploymenL ln 2003 was 4000
Lhe raLe of lnflaLlon was 310 When ln 2004 unemploymenL was 4000 Lhe lnflaLlon was 36
uurlng 2003 Lhe unemploymenL 4000Lhe wage lnflaLlon was 600 uurlng 2006 Lhe
unemploymenL was 230 and lnflaLlon was 700 ln 2007 Lhe unemploymenL was 230 when Lhe
lnflaLlon was 72 When unemploymenL was 230 Lhe lnflaLlon was 91 So from Lhe explanaLlon
we can undersLand Lhe currenL economy ls golng Lo a crlLlcal slLuaLlon


1he ke/otinship beteen woqe in/otin ond nemp/ment
chort oqe in/otin

19992000 234
20002001 331
20012002 4
20022003 846
20032004 333
20042003 203
20032006 0
20062007 067
20072008 267
20082009 1292
2
0
2
4
6
8
10
12
14
0 2 4 6 8 10 12
Wage Inf|at|on
(Genera|)
1ype LexL


28

CharL of unemploymenL


Now h|||ps Curves

1999 43
2000 332 2001 332
2002 402003 402004 402003 40
2006 232007 232008 23
1998 1999 2000 2001 2002 2003 2004 2003 2006 2007 2008 2009
Unemp|oyment kate
2
0
2
4
6
8
10
12
14
3 0 3 10 13 20 23 30 33 40 43
W
a
g
e

I
n
f
|
a
t
|
o
n
Unemp|oyment kate
1ype LexL


29

xp/onotin
1he verLlcal axls explalns wage lnflaLlon and horlzonLal axls deflnes unemploymenL raLe 1hls ls
a hlllps curve lf we explaln lL we wlll see ln 1999 Lhe unemploymenL raLe was 43 and Lhe
wage lnflaLlon occurred 234 and ln 2000 Lhe unemploymenL raLe was 3320 when lnflaLlon was
331 We see LhaL Lhe hlllps curve ls noL perfecLly affecLs ln Lhls slLuaLlon ln 2001 Lhe
unemploymenL raLe was 3320 and wage lnflaLlon was 400 We also can see durlng 2002
unemploymenL was 4000 and wage lnflaLlon was 846 When unemploymenL ln 2003 was
4000 Lhe raLe of lnflaLlon was 333 When ln 2004 unemploymenL was 4000 Lhe lnflaLlon was
203 uurlng 2003 Lhe unemploymenL 4000Lhe wage lnflaLlon was 000 uurlng 2006 Lhe
unemploymenL was 230 and lnflaLlon was 067 ln 2007 Lhe unemploymenL was 230 when Lhe
lnflaLlon was 267 When unemploymenL was 230 Lhe lnflaLlon was 1292 So from Lhe
explanaLlon we can undersLand Lhe currenL economy ls golng Lo a crlLlcal slLuaLlon




chopterl

cnc/sin
AcLually 8angladesh ls ln a danger poslLlon ere Lhe economlc condlLlon ls golng Lo
unconLrolled slLuaLlon 1he markeL should have Lo run lndependenLly When ls goes Lo bad
slLuaLlon lL should be conLrolled by govL 8uL our govL conLrols lL all Llme and when Lhey cannoL
manage Lhe slLuaLlon Lhey dellvers lL Lo Lhe prlvaLe secLors lL ls noL expecLed 1he govL should
reduce Lhelr debL 8uL Lhey are Laklng more and more lone from Lhe publlc bank 1he govL
should make a proper guldellne Lo reduce Lhe raLe of unemploymenL 1hey should dlve concern
Lo make low Lhe raLe of prlce and wage lnflaLlon 1he model of hlllps curve should be
lnLroduced Cur dream Lo make a dlglLal 8angladesh wlll noL be posslble lf we fall Lo reduce Lhe
unemploymenL and lnflaLlon 1o achleve vlslon 2020 we musL be careful abouL Lhls facLor So
Lhe proper use of hlllps curve ls necessary
1ype LexL


30

4ppendix








8|b||ography


8ooks
ndres J. and . Hernando(1997). Evidence Ior the OECD, Banco de EWorking Paper 9706.

Ghosh, . and Philips. (1998). Warning: nIlation may be
armful Lo your CrowLh lMl 5toff lopets vol 45 No4

Ghosh, . and Philips. (1998). nIlation, DisinIlation, and
CrowLh lMl wotkloq lopet
1ype LexL


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