Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/153171
Title: AN EXAMINATION OF THE SECTORAL AND DEMAND CHARACTERISTICS OF THE SINGAPORE BUSINESS CYCLE
Authors: ONG CHIN SENG
Issue Date: 1990
Citation: ONG CHIN SENG (1990). AN EXAMINATION OF THE SECTORAL AND DEMAND CHARACTERISTICS OF THE SINGAPORE BUSINESS CYCLE. ScholarBank@NUS Repository.
Abstract: Until today, the study of the business cycle in Singapore is still at an elementary stage as research findings in this field . are still very limited. This exercise is an attempt to analyse the business cycle in Singapore through a study of both supply and demand side. More specifically, both the sectoral and demand characteristics of the business cycle in Singapore are analysed. The degree of conformity of the different sectors and demand components with the general business cycle are derived. While both the Commerce and Manufacturing sectors have the highest and second highest degree of conformity respectively with the general business cycle, the Financial and Business Services surprisingly has a very low degree of conformity. When the various sectors durations are compared against their respective amplitudes for both the expansionary and contractionary phases, we noticed that while the Manufacturing sector is vulnerable to economic downturns, it is also the sector which benefits the most during the upturns. The mean growth rates of the various sectors are also compared with their SD and CV. The Financial and Business Services sector is the star performer, with the highest mean growth rate and a very low SD and CV. Similarly, while the Gross Fixed Capital Formation appears to have a high degree of conformity after the Private Consumption Expenditure, its correlation coefficient with the general business cycle is surprising low. By comparing the durations against the respective amplitudes of the demand components for both the upswings and downswings, we observed that although Increase in Stocks is the worst performer during the downturns, its expansion is the biggest during the upswing. When the mean growth rates for the demand components are plotted against their SD and CV respectively, we noticed that there is a trade-off between mean and SD for Private Consumption Expenditure, Government Consumption Expenditure, Net Exports of Goods and Services and Gross Fixed Capital Formation, that is, the higher the mean , the higher the SD. Trade-off between mean and CV is also observed for Private Consumption Expenditure, Gross Fixed Capital Formation and Government Consumption Expenditure. Increase in Stocks component has the highest values for the mean growth rate and SD respectively, while Net Exports of Goods and Services has the highest CV. The relationship between the development strategies of Singapore since 1960 and the business cycle are also analysed. The export promotion strategies which emphasizes high value-added goods have benefited Singapore in terms of delivering larger and longer expansions as well as shortening the average duration of contractions. Export promotion strategies which focused on low value-added goods do not have such clear-cut benefits. It has been associated with shorter upswings and longer downswings compared with the import substitution phase, although it has drastically reduced the severity of downturns.
URI: https://scholarbank.nus.edu.sg/handle/10635/153171
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