Omar H.M.N. Bashar

The Trickle‐Down Effect of the Mining Boom in Australia: Fact or Myth?

This paper examines the relationship between the output levels in the mining sector and various non-mining sectors in an attempt to understand the role of the mining sector in Australia. The unobserved components time series model is used to estimate the effects of the output gap and the growth regime in the mining sector on the output level of each of several non-mining sectors. Overall, the estimates obtained do not suggest an overwhelmingly positive effect running from the mining sector to other production and services sectors, implying that the trickle-down effect of the mining boom may be a myth.

The Role of Aggregate Demand and Supply Shocks in a Low-Income Country: Evidence from Bangladesh

This paper explores the relative role of aggregate demand and supply shocks in affecting the output level and inflation rate in a low-income country vulnerable to various economic shocks. The study uses Bangladesh data, and following Cover et al (2006), employs a modification of the Blanchard-Quah (BQ) approach, in which the two shocks are allowed to be correlated. Strong evidence is found for the hypothesis that aggregate demand and supply shocks are interrelated in Bangladesh. For the case in which causality is assumed to be running from demand to supply shocks, it was found that an independent supply shock plays significant role for fluctuations in inflation, which was absent in the standard BQ model. The results suggest that a tightening of monetary policy may lead to an adverse effect on the long-run growth potential and some supply-side policies may be required to supplement contractionary monetary policy in combating inflation in Bangladesh.