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Business Cycles in a Small Open Economy: Stylized Facts from Singapore

Author

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  • Keen Meng Choy

    (Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore)

Abstract

This paper is an empirical exercise that seeks to reveal the nature of economic fluctuations in the archetypal small open economy of Singapore. We assess the extent to which local business cycles are influenced by their foreign counterparts with regards to cyclicality, co-movement and volatility characteristics and then document how shock waves from abroad are spread to the broader macroeconomy once they reach Singapore’s shores. To do this, we make use of linear filters and stochastic trend models to extract the cyclical component of economic activity. The results indicate that, while idiosyncrasies are present in Singapore’s macroeconomic fluctuations, there are also stylized facts to be distilled for small open economies.

Suggested Citation

  • Keen Meng Choy, 2006. "Business Cycles in a Small Open Economy: Stylized Facts from Singapore," Economic Growth Centre Working Paper Series 0611, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
  • Handle: RePEc:nan:wpaper:0611
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    File URL: http://www3.ntu.edu.sg/hss2/egc/wp/2006/2006-11.pdf
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    References listed on IDEAS

    as
    1. Tilak Abeysinghe & Kristin Forbes, 2005. "Trade Linkages and Output-Multiplier Effects: a Structural VAR Approach with a Focus on Asia," Review of International Economics, Wiley Blackwell, pages 356-375.
    2. Paul Cashin & Sam Ouliaris, 2004. "Key Features of Australian Business Cycles," Australian Economic Papers, Wiley Blackwell, pages 39-58.
    3. Neumeyer, Pablo A. & Perri, Fabrizio, 2005. "Business cycles in emerging economies: the role of interest rates," Journal of Monetary Economics, Elsevier, pages 345-380.
    4. Abeysinghe, Tilak, 2001. "Estimation of direct and indirect impact of oil price on growth," Economics Letters, Elsevier, vol. 73(2), pages 147-153, November.
    5. James C. Morley & Charles R. Nelson & Eric Zivot, 2003. "Why Are the Beveridge-Nelson and Unobserved-Components Decompositions of GDP So Different?," The Review of Economics and Statistics, MIT Press, pages 235-243.
    6. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1.
    7. Victor Zarnowitz, 1992. "Business Cycles: Theory, History, Indicators, and Forecasting," NBER Books, National Bureau of Economic Research, Inc, number zarn92-1.
    8. Cogley, Timothy & Nason, James M., 1995. "Effects of the Hodrick-Prescott filter on trend and difference stationary time series Implications for business cycle research," Journal of Economic Dynamics and Control, Elsevier, vol. 19(1-2), pages 253-278.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Business cycles; stylized facts; Singapore; band-pass filter; small open economies;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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