The Singapore economy has experienced greater business cycle fluctuations in recent years, being subject to recurrent shocks from the external environment. Given the extreme openness of the economy—Singapore’s export share of GDP is approximately 180%—it is not surprising that the main cause of the increase in economic volatility is a rise in the frequency and magnitude of exogenous shocks. These include the downswing in the global electronics industry in 1996–97, the Asian financial crisis in 1997–98, the burst of the information technology bubble in 2001, and the outbreak of the SARS respiratory disease in 2003. Such a close sequence of external shocks no doubt induced turbulences in the economy. Figure 1 below shows Singapore’s annual GDP growth computed from quarterly data, plotted alongside its 4-year rolling standard deviation. Evidently, the latter has been on an uptrend since the mid-1990s.
Monetary policy, vector autoregressive model, interest rate, Singapore
Asian Studies | Econometrics | Finance | Macroeconomics
SMU Economics and Statistics Working Paper Series, Paper No. 19-2004
City or Country
CHOW, Hwee Kwan.
A VAR analysis of Singapore's monetary transmission mechanism. (2004). 19-2004, 1-26. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/792
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