M.A. Hossain takes a closer, critical look at Bangladesh's inflation and balance of payments. Using a combination of structural and monetary theories he develops an integrated, quarterly, macroeconomic model of inflation, economic growth and balance of payments for the period 1974 to 1985. The model used is based on two hypotheses: that inflation in Bangladesh is a monetary phenomenon, and that persistent trade deficits are inherent in its foreign-aid-based development strategy and its overvalued exchange rate policy.