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The Aggregate Consumption Puzzle In Singapore

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Author Info
Tilak ABEYSINGHE (National University of Singapore)
CHOY Keen Meng () (National University of Singapore)

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Abstract

We draw attention to an apparent puzzle in the aggregate consumption behaviour of Singaporeans. In stark contrast to the rest of the world, the average propensity to consume has plummeted to a record low of two-fifths of income in 2000 leaving the economy without a good built-in stabilizer. This phenomenon is a notable departure from the stable long-run equilibrium relationship between consumption, disposable income and wealth observed elsewhere. The explanation of this puzzle is the main focus of the paper but we also draw attention to some policy measures that may reverse the process

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File URL: http://www.fas.nus.edu.sg/ecs/pub/wp/wp0213.pdf
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Paper provided by National University of Singapore, Department of Economics in its series Departmental Working Papers with number wp0213.

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Length: 20 pages
Date of creation: 2002
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Handle: RePEc:nus:nusewp:wp0213

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Web page: http://www.fas.nus.edu.sg/ecs/index.html
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Related research
Keywords: consumption function average propensity to consume cointegrating relation asset price inflation

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Find related papers by JEL classification:
C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation and Testing
E21 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Ermisch, J. F. & Huff, W. G., 1999. "Hypergrowth in an East Asian NIC: Public policy and capital accumulation in Singapore," World Development, Elsevier, vol. 27(1), pages 21-38, January. [Downloadable!] (restricted)
  2. Stock, James H & Watson, Mark W, 1993. "A Simple Estimator of Cointegrating Vectors in Higher Order Integrated Systems," Econometrica, Econometric Society, vol. 61(4), pages 783-820, July. [Downloadable!] (restricted)
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  3. Deaton, Angus S, 1977. "Involuntary Saving through Unanticipated Inflation," American Economic Review, American Economic Association, vol. 67(5), pages 899-910, December. [Downloadable!] (restricted)
  4. Deaton, A. & Grosh, M., 1998. "Consumption," Papers 191, Princeton, Woodrow Wilson School - Development Studies.
  5. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May. [Downloadable!] (restricted)
  6. Engle, Robert F, 1982. "Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation," Econometrica, Econometric Society, vol. 50(4), pages 987-1007, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Hwee Kwan Chow, 2004. "A VAR Analysis of Singapore’s Monetary Transmission Mechanism," Working Papers 19-2004, Singapore Management University, School of Economics. [Downloadable!]
  2. Cheolbeom Park & Pei Fang Lim, 2004. "Excess sensitivity of consumption, liquidity constraints, and mandatory saving," Applied Economics Letters, Taylor and Francis Journals, vol. 11(12), pages 771-774, October. [Downloadable!] (restricted)
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This page was last updated on 2008-11-15.

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