Export earnings instability of singapore, 1957-1988: A time series analysis

Abstract

This article investigates the magnitude of export revenue instability for Singapore between 1957 and 1988 and how the pattern of instability has changed over time. Between 1957 and 1971 overall mean instability is approximately 10 per cent and is dominated by relatively high instability in the mid 1960s during a period of political and economic uncertainty in Singapore. Between 1972 and 1988 instability is higher at about 15.8 per cent and is strongly affected by shocks from the international economy between 1972 and 1975. Although our results confirm recent cross section findings that export instability is not significantly higher in the later period, this result appears to be sensitive to the high value of instability in 1964 and an upward bias for the second period arising from the use of the official merchandise export series. A heavily damped trade multiplier combined with strong trend GNP growth has largely insulated Singapore from the negative effects of export instability. (JEL F10, C32). © 1994.