Requirement:
1. Discuss Singapore’s macroeconomic state over the period in question. Is Singapore successful (relative to the US)?,; Is it fully engaged in the global economy?,; What is the Exchange Rate policy?,; ,Is the currency over-valued or undervalued?,; ,Does the, real exchange rate ,appear to be driven by relative prices (as implied by or does it appear to be driven by policy, or by the relative prospects of your country in the global economy? ,;Does the RER appear to affect the Current Account? Your goal is to try to explain movements in Real GDP and the exchange rate by the movements of the other series
2. The paper's structure need to be an Introduction, several analysis paragraphs, a conclusion and a biblio page if needed. The introduction should briefly introduce the economic movement in Singapore from 2001 to 2015.. Like I will use date extracted from figure 1 to .....) should begin with clear topic sentences, advertising what is coming.
Refer to graphs by number in the figures to explain the point. * Each paragraph is a different paragraph,;* Link ,;and compare,; paragraphs. ***Link paragraphs to theory,;(PPP).;
a. Construct RER = Ep*/p, as 1 in the first year. Compare to Net export,;and Y (real GDP and full unemployment)
b. Focus on Financial Market Links E( SPOT RATE) ,;and relative Equity Markets....,;,, ** Analysis Purchasing Power Parity and real exchange rate movement.
Conclusion, ** Conclude how does the data and information help to understand movement of Exchange rate in Singapore.,
3. I will upload necessary attachments.
The Singapore Economy
The real GDP of Singapore showed a constant increase from 2001 to 2007. After 2008, there is a great depression in the economy and the real GDP showed a great decrease from 2007 to 2008.
There is a recover in 2010 and since then the economy has been on a sustainable growth track.We can notice that the growth rate of real GDP expended a lot from 2003 to 2004. Because there was a SARs outbreak in 2003, a major turnaround occurred in 2004 allowed it to make a significant recovery of 8% growth.
Singapore’s economy, which suffered a depression in 2009, rebounded in 2010 because of strong manufacturing growth, booming in tourism-related sectors, bolstered by two new casino resorts.
Singapore Government’s borrowing is fiscally sustainable. According to the Singapore’s Central government debt level as percentage of GDP, there is a relative constant trend from 2001 to 2012 and it reached highest peak in 2012. The debt level has dropped some in year 2007 but since 2011 there is a big decrease until 2013.
The reason that why Singapore has such high government debt level is that its government uses borrowing for investing instead of spending for covering government deficit. Government debt is issued for two main purposes. First, marketable SingaporeGovernment Securities (SGS) and second, non-marketable SGS.
The equity indices of Singapore and US are quite similar from 2001 to 2008. However, the depression in year 2008 has more influence on Singapore’s economy than United States’ economy.
In addition, the recovery of Singapore seemed to be greater and faster than the United States. In 2009, Singapore’s equity is more than twice higher than United States, the data provided is percentage change.
In the graph of CPI ratio and exchange rate for Singapore and United States, both variables of two countries move similarly from 2001 to 2006. However, since 2006, the exchange rate index contiguously decreased and increased until 2014. The index of price ration, in the contrast, has increased relatively constant since 2007. Such being the case, the PPP does work from year 2001 to 2006 and it fails after 2006.
Through Singapore’s Current account curve, it is obviously that the change is quite constant in 15 years. There is a small increase between 2001 to 2003 and a small fluctuation between 2006 to 2010. Since 2010, the curve remains flat.
Since the late 1980s, Singapore has consistently posted current account surpluses annually, reflecting Singapore’s net earnings with respect to the rest of the world.Singapore’s real GDP curve is increasing constantly and it reaches its highest point in 2015 at about 51855.08 USD.
As for the graph of US interest rate relative to the Singapore’s interest rate, US interest rate curve much more big fluctuations. From 2001 to 2002 there is a great increasing for Singapore’s interest. After 2002, the interest rate begins to decrease and never reach a high value as 2002 again.
Attachment:- 20161208233747sample_paper_1.zip