The long run relationship between population growth and economic growth: Empirical evidence from Bangladesh
Does population growth induce or depress economic growth? Or, does economic growth encourage or discourage population growth? This is a long existing debate which has been sustained throughout the centuries. This paper investigates the causal relationship between GDP per capita and population growth in Bangladesh. Using the Johansen cointegration test, we find evidence of long run relationship between population growth and GDP per capita. Then with a Vector Error Correction model, we find a causal direction between the two, which suggests that in Bangladesh population growth actually negatively affects GDP per capita, but not vice versa. Therefore, to some extent Bangladesh is in Modern Growth regime stage. Hence policy implication is very clear: appropriate measures should be taken in order to arrest the population growth.
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