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Trade Cycles in a Re-export Economy: The Case of Singapore

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  • Keen Meng Choy

Abstract

This article uses econometric methods to test the hypothesis that Singapore is a ‘re-export economy’. If the hypothesis is true, merchandize exports and imports would co-move together over the course of trade cycles while exports would be insensitive to the exchange rate due to their high import content. Impulse response analysis of a monthly structural vector error correction model incorporating these trade aggregates, proxies for external demand and relative prices affirms the empirical validity of the re-export hypothesis. Innovation accounting also suggests that growth in the worldwide semiconductor industry rather than price competitiveness is the most important factor behind's Singapore's trade expansion in the long run.

Suggested Citation

  • Keen Meng Choy, 2012. "Trade Cycles in a Re-export Economy: The Case of Singapore," International Economic Journal, Taylor & Francis Journals, vol. 26(2), pages 189-201, January.
    • Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:189-201
    DOI: 10.1080/10168737.2012.688520
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