Macroeconomic Drivers of Poverty Reduction in Bangladesh: A Time-Series Analysis with ARDL Approach

Abstract

Poverty reduction remains a core objective of economic development, especially in growing economies like Bangladesh. This research examines the dynamic effects of key macroeconomic factors: inflation, GDP, unemployment, and trade openness, on poverty in Bangladesh. The analysis has been performed utilizing annual time-series data from 1983 to 2023, collected from the World Bank. To assess the short run and long run effects of the selected macroeconomic variables on poverty, the Autoregressive Distributed Lag (ARDL) model has been employed which is flexible to accommodate variables with mixed stationary integration order, either I(0) or I(1). The optimal model ARDL(3,3,3,1,3) has been selected using minimum Akaike Information Criterion (AIC), satisfying model diagnostic properties. The Bounds test result confirms the existence of long- term cointegration of variables. Short-run estimates indicate that current trade openness significantly reduces poverty, while GDP has a delayed impact. The study findings reveal that past inflation and unemployment have significant negative effects on poverty. In the long run, the growth of GDP notably reduces poverty, whereas inflation and unemployment worsen it. Policy implications highlight the need for short-term trade and employment reforms, alongside long-term strategies focused on growth, inflation control, and structural unemployment.

Dhaka Univ. J. Sci. 74(2): 263–270, 2026 (July)