Business Cycle in Singapore during the Period from 1981 to 2021

Research Article
Open access

Business Cycle in Singapore during the Period from 1981 to 2021

Shiyu Wang 1*
  • 1 National University of Singapore    
  • *corresponding author E1039618@u.nus.edu
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/7/20230248
AEMPS Vol.7
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-41-6
ISBN (Online): 978-1-915371-42-3

Abstract

Undoubtedly, the concept of the business cycle has become a crucial topic of research, given that the business cycle reflects a nation's economic development and that assessing the business cycle lays the groundwork for a nation to introduce a diverse array of economic policies. This research study aims to evaluate Singapore's business cycles from 1971 to 2021, a span of 41 years. The yearly real GDP and several of its components (private consumption, gross fixed capital formation, and government consumption spending), and CPI were filtered utilizing the Hodrick-Prescott method. Taking the cyclical components of real GDP as the reference cycle and other economic indicators as specific cycles, the author assessed and measured the fluctuations and co-movements between them with the application of standard deviation and correlation coefficient. Last, a few policy suggestions are proposed. There are five main conclusions in this article: (1) Singapore's real GDP is highly susceptible to changes in the international environment; (2) Private consumption, investment, and CPI have a positive and significant correlation with GDP, and investment is of greater relevance to economic growth in the short run; (3) Government expenditure and GDP are negatively correlated; (4) Private investment appears to be a possible cause of business cycle shocks due to the most dramatic fluctuation; and (5) The government of Singapore should encourage private investment so as to boost economic prosperity in the short term, and then promote private consumption to achieve national prosperity in the long run.

Keywords:

singapore, business cycle, HP filter, GDP, reference circle, specific cycles

Wang,S. (2023). Business Cycle in Singapore during the Period from 1981 to 2021. Advances in Economics, Management and Political Sciences,7,305-314.
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References

[1]. Burns, A. F., & Mitchell, W. C. (1946). Measuring business cycles (Issues burn46-1). National bureau of economic research.

[2]. Morley, J., & Piger, J. (2012). The Asymmetric Business Cycle. Review of Economics and Statistics, 94(1), 208–221.

[3]. Brault, J., & Khan, H. (2020). THE SHIFTS IN LEAD‐LAG PROPERTIES OF THE U.S. BUSINESS CYCLE. Economic Inquiry, 58(1), 319–334.

[4]. Luvsannyam, D., Batmunkh, K., & Buyankhishig, K. (2019). Dating the business cycle: Evidence from Mongolia. Central Bank Review, 19(2), 59–66.

[5]. Choy, K. M. (1999). Sources of macroeconomic fluctuations in Singapore: Evidence from a structural VAR model. Singapore Economic Review, 44(1), 74–98.

[6]. Meng, C. K. (2003). Singapore business cycles: A supply-side analysis. ASEAN Economic Bulletin, 1–10.

[7]. Choy, K. M. (2011). BUSINESS CYCLES IN SINGAPORE: STYLIZED FACTS FOR A SMALL OPEN ECONOMY: business cycles in singapore. Pacific Economic Review, 16(1), 18–35.

[8]. Hodrick, R. J., & Prescott, E. (n.d.). Post-War U.S. Business Cycles: An Empirical Investigation. 27.

[9]. Hamilton, J. D. (2018). Why you should never use the Hodrick-Prescott filter. Review of Economics and Statistics, 100(5), 831–843.

[10]. Phillips, P. C. B., & Shi, Z. (2020). Boosting: Why You Can Use the HP Filter (arXiv:1905.00175). arXiv. http://arxiv.org/abs/1905.00175

[11]. Zarnowitz, V. (2007). Business cycles: Theory, history, indicators, and forecasting (Vol. 27). University of Chicago Press.

[12]. Mankiw, N. G. (2020). Principles of economics. Cengage Learning.

[13]. Ozyildirim, A., Schaitkin, B., & Zarnowitz, V. (2010). Business cycles in the euro area defined with coincident economic indicators and predicted with leading economic indicators. Journal of Forecasting, 29(1–2), 6–28.

[14]. (DOS) | SingStat Table Builder – Expenditure On Gross Domestic Product In Chained (2015) Dollars. (n.d.). Retrieved July 5, 2022, from https://tablebuilder.singstat.gov.sg/table/TS/M014811

[15]. hmmed, M., Uddin, M., Rafiq, M., & Uddin, M. (2020). Inflation and Economic Growth Link – Multi-Country Scenario. International Journal of Economics and Financial Issues, 10, 47–53.

[16]. Wilson, P. (2009). Monetary policy in Singapore: A BBC approach. In Singapore And Asia In A Globalized World: Contemporary Economic Issues and Policies (pp. 63–86). World Scientific.

Cite this article

Wang,S. (2023). Business Cycle in Singapore during the Period from 1981 to 2021. Advances in Economics, Management and Political Sciences,7,305-314.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 2nd International Conference on Business and Policy Studies

ISBN：978-1-915371-41-6(Print) / 978-1-915371-42-3(Online)
Editor：Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://2023.confbps.org/
Conference date: 26 February 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.7
ISSN：2754-1169(Print) / 2754-1177(Online)

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References

[1]. Burns, A. F., & Mitchell, W. C. (1946). Measuring business cycles (Issues burn46-1). National bureau of economic research.

[2]. Morley, J., & Piger, J. (2012). The Asymmetric Business Cycle. Review of Economics and Statistics, 94(1), 208–221.

[3]. Brault, J., & Khan, H. (2020). THE SHIFTS IN LEAD‐LAG PROPERTIES OF THE U.S. BUSINESS CYCLE. Economic Inquiry, 58(1), 319–334.

[4]. Luvsannyam, D., Batmunkh, K., & Buyankhishig, K. (2019). Dating the business cycle: Evidence from Mongolia. Central Bank Review, 19(2), 59–66.

[5]. Choy, K. M. (1999). Sources of macroeconomic fluctuations in Singapore: Evidence from a structural VAR model. Singapore Economic Review, 44(1), 74–98.

[6]. Meng, C. K. (2003). Singapore business cycles: A supply-side analysis. ASEAN Economic Bulletin, 1–10.

[7]. Choy, K. M. (2011). BUSINESS CYCLES IN SINGAPORE: STYLIZED FACTS FOR A SMALL OPEN ECONOMY: business cycles in singapore. Pacific Economic Review, 16(1), 18–35.

[8]. Hodrick, R. J., & Prescott, E. (n.d.). Post-War U.S. Business Cycles: An Empirical Investigation. 27.

[9]. Hamilton, J. D. (2018). Why you should never use the Hodrick-Prescott filter. Review of Economics and Statistics, 100(5), 831–843.

[10]. Phillips, P. C. B., & Shi, Z. (2020). Boosting: Why You Can Use the HP Filter (arXiv:1905.00175). arXiv. http://arxiv.org/abs/1905.00175

[11]. Zarnowitz, V. (2007). Business cycles: Theory, history, indicators, and forecasting (Vol. 27). University of Chicago Press.

[12]. Mankiw, N. G. (2020). Principles of economics. Cengage Learning.

[13]. Ozyildirim, A., Schaitkin, B., & Zarnowitz, V. (2010). Business cycles in the euro area defined with coincident economic indicators and predicted with leading economic indicators. Journal of Forecasting, 29(1–2), 6–28.

[14]. (DOS) | SingStat Table Builder – Expenditure On Gross Domestic Product In Chained (2015) Dollars. (n.d.). Retrieved July 5, 2022, from https://tablebuilder.singstat.gov.sg/table/TS/M014811

[15]. hmmed, M., Uddin, M., Rafiq, M., & Uddin, M. (2020). Inflation and Economic Growth Link – Multi-Country Scenario. International Journal of Economics and Financial Issues, 10, 47–53.

[16]. Wilson, P. (2009). Monetary policy in Singapore: A BBC approach. In Singapore And Asia In A Globalized World: Contemporary Economic Issues and Policies (pp. 63–86). World Scientific.

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