The Singapore Economic Review

This paper provides a brief review of the measures developed to achieve the goal of economic evaluation of public projects. The limitations of the Kaldor–Hicks criterion are highlighted and these issues lead to the development of the discounted present value (DPV) method and the compounded terminal value (CTV) method. However, the latter methods were not without problems. It is demonstrated that using DPV or CTV to evaluate certain public projects produces exorbitantly small DPVs or exorbitantly large CTVs, which would lead to a manifestly perverse ranking if adopted. A new method of evaluating these public projects, known loosely as the corrected equivalent present value method, is proposed to alleviate the problems of DPV and CTV.

This paper looks at how Singapore's exchange rate regime has coped with exchange rate volatility, by comparing the performance of Singapore's actual regime in minimizing the volatility of the nominal effective exchange rate (NEER) and the bilateral rate against the US dollar with some counterfactual regimes and the corresponding performance of eight other East Asian countries. In contrast to previous counterfactual exercises, we apply a more disaggregated methodology for the trade weights, a larger number of trade partners and ARCH/GARCH techniques to capture the time-varying characteristics of volatility. Our findings confirm that Singapore's managed floating exchange rate system has delivered relatively low currency volatility. Although there are gains in volatility reduction for all countries in the sample from the adoption of either a unilateral or a common basket peg, particularly post-Asian crisis, these gains are relatively low for Singapore, largely because of low actual volatility. There are additional gains for non-dollar peggers from stabilizing intra-east Asian exchange rates against the dollar if they were to adopt a basket peg, especially post-crisis, but the gains for Singapore are again relatively modest. Finally, the conclusion from previous counterfactual studies that there is little difference between a unilateral basket peg and a common basket peg in terms of stability reduction is confirmed.

This paper analyzes exports of multinational corporations (MNCs) in Vietnamese manufacturing, highlighting the disproportionately large contribution of heavily-foreign MNCs with foreign ownership shares of 90% or more. The exports of heavily-foreign manufacturing MNCs are substantial and concentrated in apparel, footwear, and electric machinery-related industries. Export propensities also tend to be markedly higher in heavily-foreign MNCs than in other MNCs, and these differences generally persist after controlling for the effects industry affiliation, firm size, vintage, and capital intensity. There is a large variation in the relationship between ownership shares and export propensities among industries and years, however.

The role of agriculture in the process of growth and development arises mainly from its linkages with other sectors of an economy. The agricultural sector in developing countries in recent times has recorded secular declines in terms of its contribution to export earning and domestic consumption. This observation is associated with policy inertia among other factors. The Structural Adjustment Programme adopted in Nigeria in the 1980s, is one policy shift aimed at boosting agricultural production. This article aims at empirically verifying the effects of policy reform on agricultural exports in Nigeria by estimating a simple impact assessment model using a slope-dummy method. The estimates among others indicate that agricultural export is significantly influenced by domestic consumption and economic liberalization. The findings suggest that policy reforms on agricultural productivity should go beyond liberalization of the economy.

After the East Asian crisis in 1997, the issue of whether stock prices and exchange rates are related or not have received much attention. This is due to realization that during the crisis the countries affected saw turmoil in both their currencies and stock markets. This paper studies the non-linear interactions between stock price and exchange rate in Malaysia using a two regimes multivariate Markov switching vector autoregression (MS-VAR) model with regime shifts in both the mean and the variance. In the study, the Kuala Lumpur Composite Index (KLCI) and the exchange rates of Malaysia ringgit against four other countries namely the Singapore dollar, the Japanese yen, the British pound sterling and the Australian dollar between 1990 and 2005 are used. The empirical results show that all the series are not cointegrated but the MS-VAR model with two regimes manage to detect common regime shifts behavior in all the series. The estimated MS-VAR model reveals that as the stock price index falls the exchange rates depreciate and when the stock price index gains the exchange rates appreciate. In addition, the MS-VAR model fitted the data better than the linear vector autoregressive model (VAR).

This paper reviews the literature on the impact of marijuana decriminalization policy on marijuana smoking prevalence. Due to mixed findings in the existing studies, we attempt to find a common basis to explain the different results across papers. The main purpose is to provide a coherent background as to what outcomes may be expected from certain type of data, econometric models, and explanatory variables. If possible, we also try to provide the explanation as to why certain results are found.

It could be argued that for some developing countries, low to moderate inflation is beneficially related to economic growth and that it is only after a certain threshold level that inflation becomes deleterious to growth. This has implications for macroeconomic policy requirements placed on developing countries by international loan bodies. This paper, using data from Indonesia, examines the relationship between growth and inflation. Particularly, a threshold VAR model is used to test for changes in the relationship between inflation and growth. The results so far are exploratory and limited by a small data sample. The results are consistent with a threshold level between 8.5% and 11% producing structural shifts in the relationship between inflation and growth.

This paper investigates, for the first time, the degree of exchange rate pass-through to domestic prices in all five founding members of ASEAN. For this purpose, a three-variable-recursive VAR model was applied that uses the Choleski decomposition method along the distribution chain of pricing, using data for the period 1968 to 2001.

The results show that a strong case for entering a currency union can be made for the cases of Singapore, Malaysia and Thailand, as in these countries there appears to be the case of exchange rate disconnect. A case for common currency can also be made for Indonesia but for entirely different reasons. For this country, an independent monetary policy is a clear source of shock to the economy and therefore a currency union would tend to eliminate them. Finally, a weaker case for a common currency can be made for the Philippines as evidence of some exchange rate pass-through to inflation was found but not to import prices.

This paper presents an integrated approach for assessment of export performance based on principal component analysis (PCA) and Numerical Taxonomy (NT). The integrated assessment is influenced by shaping factors such as export value, production value, export growth, R&D expenditure and value added. Iranian chemical industries are selected as a case study according to the format of International Standard for Industrial Classification (ISIC) for a five-year period. The modeling approach of this paper could be used for analyzing other sectors and countries. This study shows how total export efficiency is obtained through the proposed approach whereas previous studies consider conventional productivity approach by a single indicator.