A publication of the Department of EconomicsFaculty of Arts & Social Sciences

Elizabeth Sam*

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* Mrs Sam is the Deputy President of Oversea-Chinese Banking Corporation Limited.She has been a Director of the Singapore International Monetary Exchange Limited(SIMEX) since its reorganisation in 1983. She was Chairman from 1987 to 1990 and from1993 to June 1996, and is now currently Deputy Chairman of SIMEX, and Chairman of theExecutive Committee. She is also the Chairman of the Investment Management Associationof Singapore. She was a Member of the Singapore Trade Development Board from 1989 to1994.

was the first batch of undergraduates who did the 3-year honoursdegree course. I was asked initially to do an honours course in historywhere I had better grades, but like PM Goh, I had thought that economicswas a more practical subject and was likely to be more useful in myworking life. At that point, I was already seriously interested in workingin the private sector and had dismissed the career expected for a womangraduate which is to teach.

The class in economics that year was a small one; there were not morethan 30 of us of which only 3 were women. This I believe contrastsignificantly with today’s classes which are much larger and largelydominated by women undergraduates. I guess in those early days I beganto get used to a “male dominated” environment which continued into myworking life. Today, however, it is fair to say that if we include middlemanagement, women possibly accounts for a larger percentage ofemployees in the financial industry.

After graduation, I looked for a job in the private sector and found to mydismay companies were not particularly interested in employing a womangraduate in economics. Again, the public sector led the way and I wasamongst the first 3 or 4 women admitted directly to the AdministrativeService. There were then in the Administrative Service 2 other women,both of whom were however transfers from existing Government Services.Thus we were the first direct recruits and everything was equal, exceptfor medical facilities where the families of the men were entitled to thebenefits of free medical facilities whereas the families of the womenwere not.

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Department News

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Staff News

Student Activities

Focus

Forthcoming Event

N A T I O N A L U N I V E R S I T Y

of S I N G A P O R E

July 1998

My initial posting was to the Economic Development Division (EDD)of the Ministry of Finance and I remained there until 1971 whenthe Monetary Authority of Singapore (MAS) was formed and Iwas transferred to the MAS. In those early years, I was alreadyinvolved in work relating to the financial sector. The EDD wasresponsible for supervision of banks, finance companies and theimplementation of exchange control, management of externalresources and so forth. The courses in economics provided usefulgrounding for my work, particularly the courses we took inmonetary economics. What was interesting was that I foundthat theory when put to practice did not always have the expectedresults.

The early years were exciting years. It was in 1968 that Singaporemade its first major move to develop Singapore as a centre forfinancial activities. This came about when Mr Dick van Oenan,then the General Manager of Bank of America Singapore,approached the Ministry with a proposal to start an offshore dollarmarket, subsequently called the Asian Currency Unit (ACU). Hewas able to convince Mr Sim Kee Boon, who was then PermanentSecretary, and subsequently the Minister, Dr Goh Keng Swee.The tax concession to allow such a market to be established wasgiven. Thus the Asian Dollar Market was born.

Since then, many measures have been taken to develop the AsianDollar Market as well as other financial activities. The success ofthe financial sector is evidenced by the number of people employedin the industry, the number of banks, merchant banks, insurancecompanies, fund management companies and many other financialinstitutions. Financial services today contribute approximately12% to GDP.

Today, we are again at the crossroads of financial servicesdevelopment. A re-stocking and re-evaluation is taking place inthe light of the Asian economic crisis, the advance of technologyand telecommunications resulting in globalization of the marketplace.

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distinguished alumnus column

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The Department would like toexpress our thanks to Mrs Sam forher very interesting and candidcontribution to our DistinguishedAlumnus Column — Editor

ThankYou

he Department hosted the University’s firstPublic Lecture for 1998 on 14 January.Delivering a lecture on Asia’s financial crisis toa packed auditorium, well-known Harvardeconomist Jeffrey Sachs criticised theInternational Monetary Fund (IMF) for deepeningthe crisis in the banking system of Asia’sbattered economies and predicted that aprolonged period of adjustment lies ahead.

Presenting an overview of Asia’seconomic crisis, Professor Sachs argued that thefailure to predict the turmoil was itself evidenceof a lack of proper understanding of the natureof the crisis. Markets, governments and ratingagencies, he noted, seemed unaware of theimpending crisis and banks had put money intothe affected countries up to the last moment.In his view, the region was paying the price ofincreased reliance on foreign capital to financedomestic investment, and the erosion of exportcompetitiveness by rapid capital inflows.Alongside, the financial system had grown fragilewith excessive short-term debt.

A trenchant critic of the IMF, ProfessorSachs bemoaned the IMF’s lack of a clearstrategy to tackle Indonesia’s foreign debt. He

by Professor Jeffrey Sachs

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maintained that Indonesia desperately neededa strategy to re-capitalise its banks, whosecollapse he blamed on the IMF’s alarmist andabrupt style of intervention. He also chargedthat the IMF’s prescription of high interest rateshas done nothing to stabilise the currencies oftroubled economies, but has precipitated a freefall. He showed charts which had the baht, wonand rupiah at much lower levels after the IMF’sintervention.

Professor Sachs further argued that allthe current rhetoric about Asia being a basket-case with corrupt governments and failedsystems had neglected to highlight the fact that,for every Asian borrower, there was a Western,capitalist lender handling the flip side of thetransaction.

More than 600 guests, which includeddiplomats, top CEOs and senior executives fromthe public and private sectors, attended the one-hour lecture. Professor Sachs is the Director ofthe Harvard Institute for InternationalDevelopment. He is much sought-after in theinternational lecture circuit, and has been citedby the New York Times as “probably the mostimportant economist in the world”.

LectureLecture

rofessor Basant Kapur delivered an InauguralProfessorial Lecture to an audience of about 100people on 19 January 1998. Speaking on thetheme, “Interfaces between Economics andOther Disciplines”, Professor Kapur said that, inthe twentieth century, the fundamentalassumptions of economic analysis have beenprecisely, and rather narrowly, defined. A vastcorpus of rigorous theorizing has been built onthis foundation, and subjected, to the extentpossible, to rigorous empirical testing. Hepointed out that, while a great deal has beenlearnt in the process, the findings themselves,by raising further questions, have led some ofthe most eminent and reflective thinkers of theprofession to believe that there are limitationsto the basic research programme of economics,and that, to achieve further advance in manysignificant areas, a more interdisciplinaryapproach is warranted.

In particular, conventional economic theoryis very largely predicated on the assumption thateconomic agents are motivated solely by thepursuit of material self-interest in all their

by Professor Basant Kapur

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dealings. Professor Kapur maintained that sucha stance is descriptively and predictivelyinaccurate, and is contrary to various greatethical teachings, both Eastern and Western,which moreover are taken seriously by largenumbers of people. He observed that there is astrong normative prescription of non-purely-self-interested behaviour in the great religious andcultural heritages of the world. Endeavourstowards such behaviour serve to gradually widenand deepen the individual’s social concerns and,moreover, such a progressive process servesto neutralise the ‘elements of appetite andpassion’ in the individual, and thereby increasehis ‘self-control’ or, as economists would say,his ability to make consistent, rational choices.He cited Philippe Rushton’s investigations whichsuggest the possibility of an intriguing linkbetween the positive and the normative, andcalled for further research on the value-orientations that are conducive to thedevelopment of particular personality traits.

Professor Kapur also highlighted RobertFrank’s thesis which argues that people generally

InauguralProfessorial Lecture

InauguralProfessorial Lecture

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department news

he Department’s Centre for the Study ofTransitional Economies (CSTE) is responsible forproviding policy advice, training programmes,research support, and other assistance tofacilitate the transformation of the (formerly)centrally planned socialist economies towardsmarket economies. From November 1997 toJanuary 1998, the Centre hosted 11 scholarssent by China’s Ministry of Finance for a 3-monthinternship funded by the World Bank’s EconomicDevelopment Institute.

The scholars, all lecturers in Chinesecolleges and universities, were here to developtraining materials for use in their respectiveinstitutions. Six colleagues from theDepartment, Drs. Amina Tyabji, Bian Jiang,Edward Nosal, Innwon Park, Lu Ding and ZhangZhaoyong, advised these visiting scholars ontheir course material collection. The Centre alsoarranged on their behalf a number of field visitsto statutory boards and governmentdepartments, including the Central ProvidentFund Board, the Trade Development Board, theInland Revenue Authority of Singapore, and theBoard of Commissioners of Currency, Singapore.To help the scholars collect as many teachingreferences as possible within their limitedbudget, the Centre called on the Department’sacademic staff to donate used textbooks to thetrainees. The response was extremely positivewith staff donating about 150 copies of usedtextbooks to the scholars. The Centre wouldlike to thank all staff participants for theirsupport.

Centre for the Study of Transitional Economies

Centre for the Study of Transitional EconomiesT

Gan XingqiongMarch 14,1998.

“ Our workshop of scholars from China ,sponsored by WorldBank, has been accorded an enthusiastic reception by

CSTE during our days of visiting Singapore. CSTE hasprovided so many favourable conditions (includingaccommodation, internet of NUS, etc) for us that we

finished our tasks ahead of time. CSTE also organised usto make observations to some agencies such as CPF, MAS,

Inland Revenue Authority of Singapore, TradeDevelopment Board and so on. This has made us have a

good understanding of Singapore economic systems and itsadvanced management methods.

Additionally, we have made full use of NUS Library andsearched for a lot of materials related to our research field.

In a word, this training programme should be verysuccessful, we have learned much from it. At last we shouldbe greatly grateful to Dr Lu Ding and Dr Zhangzhaoyong

and others again and again!

“have a ‘psychological reward mechanism’ thatassigns ‘disproportionate weight to near-termrewards’, thus creating a ‘self-control’ or‘impulse-control’ problem. The upshot is thatthere will be inconsistencies or anomalies in theirintertemporal choices. Professor Kapur citedvarious studies of savings behaviour in supportof this proposition. However, as Frank furtherpoints out, emotions and values can serve tooffset this psychological reward mechanism andlead to more consistent intertemporal decision-making.

For all the above reasons, Professor Kapurstressed that it is very important to adopt awider view of human motivations, includingthose relating to ‘other-regarding concerns’ andco-operative behaviour, in both analytical andempirical contexts. Such a wider perspective canenrich our understanding of co-operativebehaviour in a variety of important economicrelationships. He appealed for a vastly increasedattention to interdisciplinary perspectives, andthe recognition that positive (other-regarding)aspects of the cultural heritage of countriesrepresent an economically valuable resourcewhich should be selectively identified andencouraged.

The Lecture was followed by a livelydiscussion involving Faculty members fromvarious disciplines, which clearly suggests thatthe issue is one of wide interest. AssociateProfessor Chng Meng Kng chaired the Lecture.

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T he Department’s Econometric Studies Unit (ESU) held a one-day workshop on The Financial Crisis and Asian Economies on 6March 1998 at the Carlton Hotel. The Workshop was sponsoredby Citibank, N.A. and attracted a record 200 participants, includinganalysts, bankers, treasurers, academics and public sector officials.The proceedings were widely reported in the major newspapers.

A key attraction at the workshop was the ESU’s forecastand analysis of the impact of the financial crisis on the Singaporeeconomy, presented by Drs Ng Hock Guan, David Owyong andTan Lin Yeok. Using an econometric model, the ESU teamforecasted that the Singapore economy would grow by 4.1 percent this year (at the high end of the Government’s forecast of2.5 to 4.5 per cent) and by an average of 4.5 per cent over thenext three years. This year’s growth would be led by theconstruction sector and merchandise exports to the OECDcountries.

The second paper by Associate Professor Mukul Asherdiscussed the implications for the Singapore Budget of fiscalreforms in Southeast Asia. He queried whether the “business asusual” approach in the 1998-99 Singapore budget was appropriategiven the severity of the regional financial crisis. He also arguedthat the manner in which fiscal demands and issues were tackledwould have an impact on the timing and sustainability of recoveryin the region.

Econometric Studies Unit Workshop:The Financial Crisis and Asian Economies

Econometric Studies Unit Workshop:The Financial Crisis and Asian Economies

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department newsthe accumulation of sizable debts, and theslowdown of Asian export growth.

Another highlight of the Workshop was apanel discussion on the outlook for the Asiancurrencies and stocks chaired by Mr Alex Erskine,the Head of Asian Research at Citibank, N.A.Other panelists included Mr David Cohen fromMMS International, Mr Victor Say from theRepublic Bank of New York, Ms Jacqueline Ongfrom I.D.E.A., and Associate Professor AugustineTan from the Department. The panel discussionwas lively and interesting. There was muchdisagreement among the panelists as to wheninvestors should start re-investing in Thailand,South Korea and Indonesia, and also, on themovement of the US dollar in the months ahead.

The Workshop was a great success duelargely to the sterling contribution of theeminent group of speakers involved, and theexcellent chairmanship and organisational skillsof ESU Co-ordinator, Dr Ngiam Kee Jin.

Mr Neil Saker, Head of Economic Researchat SocGen-Crosby Securities, presented the thirdpaper which provided the short-and-mediumterm prospects for the Asian economies. Hepredicted that real economic growth this yearwould be -9.5 per cent for Indonesia, -8.3 percent for South Korea and -3.7 per cent forThailand.

The fourth paper on the causes of theAsian financial crisis was given by ProfessorTakatoshi Ito, who served as a Senior Adviserto the IMF before taking up his currentprofessorial position at the Institute of EconomicResearch at Hitotsubashi University in Tokyo.His view was that the Asian currency crisis wasprecipitated by a loss of confidence on the partof the affected countries’ own citizens andforeign investors. Confidence eroded for manyreasons, including the belated recognition ofpolicy errors, the weak banking sector, the non-sustainability of large current account deficits,

We would like to highlight below some recently published/forthcoming books and journal articles written by staff.

EVALUATING DENSITY FORECASTSBy Francis X. Diebold, Todd A. Guntherand Anthony S. TayInternational Economic ReviewSpecial Issue on Economic Forecasting and EmpiricalMacroeconomics (forthcoming)

Density forecasting is increasingly more important andcommonplace, for example in financial riskmanagement, yet little attention has been given tothe evaluation of density forecasts. The authorsdevelop a simple and operational framework for densityforecast evaluation. They illustrate the frameworkwith a detailed application to density forecasting ofasset returns in environments with time-varyingvolatility. Finally, several extensions are discussed.

FORECASTING SINGAPORE’SQUARTERLY GDP WITH MONTHLYEXTERNAL TRADEby Tilak AbeysingheInternational Jouranl of Forecasting (forthcoming)

When different time series are reported at differenttime intervals such as monthly and quarterly thecommon practice in econometrics is to convert allthe high frequency series to the lowest frequencyavailable. As a result the information contained in thehigh frequency series is lost. In this paper amethodology is developed to formulate a dynamicregression with variables observed at differentfrequencies. This methodology is applicable if theexplanatory variables are observed more frequentlythan the dependent variable. The methodology isdemonstrated by developing a forecasting model forSingapore’s quarterly GDP based on monthly externaltrade.

BEST LINEAR UNBIASEDDISAGGREGATION OF ANNUAL GDPTO QUARTERLY FIGURES: THE CASEOF MALAYSIAby Tilak Abeysinghe and Christopher LeeJournal of Forecasting (forthcoming)

Quarterly GDP series are still not available for manycountries. This paper suggests an empirical procedureadapted from the Chow-Lin methodology to derivequarterly estimates from annual GDP figures andproduces quarterly GDP by sectors for Malaysia from1973Q1 onwards. A comparison of these estimateswith some univariate interpolations show that the useof related series can produce substantially superiorestimates of GDP compared to univariate methods.The data set is available from the first author

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ENVIRONMENT AND THEDEVELOPING WORLD: PRINCIPLES,POLICIES AND MANAGEMENTby Avijit Gupta and Mukul G. AsherJohn Wiley & Sons, 1998, 360pp

Environment and the Developing World brings togetherthe various aspects of environmental studies andmanagement (earth and natural sciences, engineeringand economics) as they relate to the developing world.It discusses environmental issues as well as thetechniques and infrastructure for their managementat various levels: global, national and local. Theexamples range from global warming and ozonedepletion to the management of water resources andindoor air pollution. The book stresses the interrelatedand interdisciplinary nature of environment, discussesthe concept of sustainable development, explores therole of non-governmental organisations, and evaluatesthe importance attributed by international andmultilateral organisations to monitoring environmentalaspects of development projects. It critically reviewsvarious economic, social and regulatory policies whichaddress environmental issues. Profuse illustrations,boxed case studies and stimulating exercises makethe book a unique teaching tool in environmentalmanagement in the developing world.

ENDOGENOUS TRADE POLICY ANDTHE GAINS FROM INTERNATIONALFINANCIAL MARKETSby M.B. Devereux and K.M. LeeJournal of Monetary Economics (forthcoming)

This paper examines the interaction betweeninternational financial markets and trade policy. Whentrade policy is endogenous, there is secondary gainfrom opening up financial markets, besides direct risk-sharing benefits. By breaking the direct link betweenterms of trade and welfare, international portfoliodiversification can allow for less trade protection in atariff game between governments. The modelestimates the welfare gains from international financialmarkets. The results show that these indirect ‘trade’gains from financial markets are larger than the direct‘risk-sharing’ gains. However, in the tariff game withfinancial markets, there are multiple equilibria.

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publications

BANKING CREDIT-QUOTA PLAN AS AMACROECONOMIC POLICYINSTRUMENT IN CHINA:EFFECTIVENESS AND COSTSby Ding Lu and Qiao YuEconomic Systems (Germany), 22 (2), June 1998.

Credit quota plan is an important feature of the post-reform Chinese banking system. The performancerecords of the credit-quota control, however, did notjustify it as an effective instrument for macroeconomicmanagement. Factors that have undermined itseffectiveness include state banks’ obligation tosupport state-owned enterprises, regionalgovernments’ symbiotic relationship with the localbank branches, and the growing autonomy of financialinstitutions. A series of social-economic developmentsin recent years have further eroded the effectivenessof the credit quota control and made it an increasinglycostly policy instrument to keep. Time is ripe for Chinato switch to a central banking system based onfractional reserves and open market operations.

FOREIGN CAPITAL, URBANUNEMPLOYMENT AND ECONOMICGROWTHby Zeng Jinli, Michael Fung and Lijing Zhu, Review ofInternational Economics (forthcoming)

Static effects of foreign direct investment (FDI) onthe economic performance of developing countrieshave been extensively studied in the literature ontrade and development. In this paper, utilizing a three-sector endogenous growth model, the authors studythe effects of FDI on the dynamics of urbanunemployment, labour income and capital income aswell as national welfare in a Harris-Todaro economy.It is shown that more FDI can affect the economy’sdynamics and national welfare in either way, positivelyor negatively. Further, they derive the conditions asto how the growth rate and welfare effects of FDIrelate to the intersectoral mobility of capital, thedestination of FDI, the elasticities of substitution, andthe factor intensities of the final good production.

MODELLING MONEY DEMAND INOPEN ECONOMIES: THE CASE OFSELECTED ASIAN COUNTRIESby Ahmed M. KhalidApplied Economics (forthcoming)

While early work on money demand estimation focusedprimarily on the importance of domestic variables,many studies in later years have suggested thatforeign variables also influence the domestic demandfor money in an open economy. Especially, with therapid financial market liberalization in some of theAsian economies in the last couple of decades, openeconomy factors have become very important in thedetermination of money demand. Therefore, thispaper aims to ascertain the degree by which foreignopportunity cost variables influence money demandin the Philippines, Singapore, and South Korea. Theauthor performs cointegration analysis and estimatesan error correction model using quarterly time-seriesdata. The empirical results support the inclusion offoreign opportunity cost variables in the moneydemand function.

A LIKELIHOOD RATIO TEST FOR ASHIFT IN THE LIFE LENGTHDISTRIBUTIONby Uditha BalasooriyaCommunications in Statistics- Theory & Methods(forthcoming)

In this article, the author discusses the problem ofdetecting the effect of a shock occurring in a life testexperiment involving n test specimens. It is assumedthat a shock occurs at the (n - r)th failure where r isknown. Such a shock is suspected to have alteredthe parameters of remaining lifelengths of thesurviving specimens. Under this set-up, a test basedon a likelihood ratio criterion is discussed. It has beenshown that when the lifelength distribution isexponential, the null distribution of the proposed teststatistic is beta of type I with parameters r and (n -r). The distribution of the proposed test statisticunder alternate hypotheses and the exact form ofthe power function have been derived.

THE FUTURE OF RETIREMENTPROTECTION IN SOUTHEAST ASIAby Mukul G. AsherInternational Social Security Review, Vol 51, 1/98,pp 3-30

This paper analyses the formal retirement protectionsystems in five economically successful, rapidlyindustrializing, and globalized economies of SoutheastAsia: Indonesia, Malaysia, the Philippines, Singapore,and Thailand. It finds that while there are majordifferences in the formal retirement protectionsystems of the five countries in terms of coverage;contribution rates; administrative and complianceefficiency; and regulatory structures, the maincommon feature (with the exception of the Philippines)is aversion to social insurance and predominantreliance on individual provision through publiclymandated and managed provident funds. While thesesystems do minimize the fiscal burden on the Stateand thereby help maintain internationalcompetitiveness, they provide socially inadequatelevels of retirement protection and are weak inensuring efficiency of the saving-investment process.Moreover, several design and institutional featuresprevent full realization of many of the advantages ofthe provident funds found in these countries. Theymay, therefore, benefit by following the worldwidepension reform debate more closely, particularlyconcerning design and institutional and regulatorystructures for mandatory defined-contributionschemes.

conferencesStaff members are actively involved in research and this is reflected in the number of conference paperspresented. Some of the conferences that our staff members participated in during the period January toJune 1998 are listed below.

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Dr Lu Ding

Dr Lu Ding

Assoc Prof Mukul Asher

Assoc Prof Mukul Asher

Dr Junxi Zhang

Assoc Prof Bhanoji Rao

Assoc Prof Augustine Tan

Dr Koh Ai Tee

Allied Social ScienceAssociation1998 Annual Meeting(Organised by ChineseEconomic Associationin North America)

Seiki University’s 50thAnniversaryInternationalConference

Pension SystemReform Governanceand Fund Management(Organised byEconomicDevelopment Institute,World Bank)

Regional Forum onPension Fund Reform(Organised by APEC)

Economics andFinance Workshop(Organised by theUniversity of HongKong)

Indore ManagementAssociation NationalConvention ‘98

The Asian EconomicCrisis and its impacton Australia(Organised by theWestern AustralianChinese Chamber ofCommerce Inc.)

Managing Complexity:The Future ofInformation andLearning inOrganisations(Organised by OregonGraduate Institute ofScience &Technology)

Hong Kong’s Reversion and its Impacton China’s Policy Towards ForeignInvestment

Enlightenment Tradition in Anglo-America Capitalism vs ConfucionTradition in Modern Oriental MarketEconomics

Investment Policies and Performanceof Provident Funds in Southeast Asia

Strategies for the Administration of thePension Funds

A General Intertemporal EquilibriumModel

The East and South-East AsiaFinancial Crisis - Implications forIndia

The Asian Currency Turmoil

Integrating Advanced Learning,Knowledge Management andOrganizational Creativity into theWork Place: Quest for New HumanResource Management Approaches inAsia

Chicago, USA

Tokyo, Japan

Jiangsu, China

Cancun,Mexico

Hong Kong

Indore, India

Perth,Australia

Oregon, USA

3-5 Jan ‘98

9-10 Jan ‘98

13-15 Jan ‘98

4-6 Feb ‘98

5-7 Feb ‘98

13-14 Feb ‘98

27 Feb ‘98

5-7 Mar ‘98

Staff Conference Title Title of Paper Venue Date

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Assoc Prof Mukul Asher

Assoc Prof Bhanoji Rao

Dr Anthony Tay

Assoc Prof Mukul Asher

Dr Hui Weng Tat

Dr Lee Khang Min

Dr Shandre Mugan Thangavelu

Dr David Owyong

Social Policy for the21st Century(Organised by theWorld Bank)

InternationalSymposium on ForeignDirect Investment inEast Asia(Organised byEconomic ResearchInstitute of EconomicPlanning Agency,Government of Japan)

Conference on HighFrequency Data inFinance(Organised by OlsenAssociates ofZurich)

InternationalWorkshop on PensionReforms(Organised byEconomicDevelopment Institute,World Bank)

Impact of theEconomic Crisis onAsian Migration: PolicyImplications(Organised by theScalabrini MigrationCenter)

Canadian EconomicAssociationConference

Canadian EconomicAssociationConference

Money, Investment andRisk(Organised by Facultyof Economics & SocialSciences, NottinghamTrent University)

Reforming Social Security Systems inAsia

TFP Growth in ManufacturingIndustries in ASEAN: An ExploratoryStudy of FDI Intensive and OtherIndustries

Evaluating Density Forecasts withApplications to Financial RiskManagement

Impact of Financial Crisis on ProvidentFunds in Southeast Asia

The Asian Economic Crisis: Impact onLabour Market and Migration inSingapore

The Choice of Financial MarketStructure

Economics of Scale Effects onManufacturing Productivity Growth

Monetary Spillovers and Investment

Manila,Philippines

Tokyo, Japan

Zurich,Switzerland

Hangzhou,China

Manila,Philippines

Ottawa,Canada

Ottawa,Canada

Nottingham,UK

10-13 Mar ‘98

26-27 Mar ‘98

1-3 April ‘98

24-27 Apr ‘98

14-15 May ‘98

28-31 May ‘98

28-31 May ‘98

3-6 Jun ‘98

Staff Conference Title Title of Paper Venue Date

We would like to extend a very warm welcome tothe following staff:

Dr Uditha Balasooriya, Senior Lecturer, who re-joined the Department on 26 December 1997,

and

Dr Cheung Siu Hung, Fellow, who took up theappointment on 18 December 1997.

The Department of Statistics wasestablished on 1 April 1998. With thisinstitutional change, Drs Balasooriya,Cheung and Lee, together with 15 currentstaff members, were transferred to thenew Department. We would like to takethis opportunity to bid the followingcolleagues and to wish them allthe best in the future.

Senior LecturersDr Bian GuoruiDr Chan Wai SumDr Chua Tin ChiuDr Lin Ting KwongDr Lu Wang ShuDr Soltan M Sadooghi-AlvandiDr Sutaip Saw Leng ChooiDr Soon Teck Wong

LecturersDr Kwong Koon ShingDr Yang Zhenlin

Senior TutorsMr Chan Kin YeeMs Koh Sock ChengMs Lee Bee Leng

Senior FellowAssociate Professor

Lee Yoong Sin

Teaching AssistantMr Chew Boon Kiat

Dr Huang Huei Chuen joined theDepartment of Information Systems andComputer Science on 1 April 1998.Dr Ngiam Kee Jin joined the Departmentof Finance and Accounting on 1 July1998. Our best wishes also go to them.

Dr Ronnie Lee Teng Chee for obtaining his Ph.D.from the University of Waterloo. Welcome backto the Department.

OurHeartiest

CongratulationsTo ...

OurHeartiest

CongratulationsTo ...

welc omewelc ome......

AllTheBest

AllTheBest

ad i e u

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Freshman Orientation Camp’98

he Economics and Statistics Societyorganized its 1998 Freshman Orientation Campfrom 22 to 25 June to introduce the incomingyear one undergraduates to the NUSenvironment. The theme “Fifth Element” waschosen for this year’s camp.

The main objectives of the camp were toget the freshmen to familiarize themselves withthe physical environment, to get to know seniorNUS students who would act as mentors tothem, and to build friendships amongst thefreshmen prior to the start of the semester.Since most of the participants were those whowanted to take up either Economics orStatistics, or both subjects, during their firstyear of study, the freshmen could get to knowtheir lecture or even tutorial mates prior to thebeginning of the semester. It was envisaged thatthey would find it easier to adapt to the newlecture and tutorial system as they go throughthe system with their new friends.

Instead of going to Sentosa this year, theparticipants tried out something new in whatthey call “the exciting city hunt”. Theirinteresting performances at the various spotsin public places livened up the boring routine ofthe commuters, passers-by and tourists. Similarto last year’s programme, there was an“initiation” night when the freshmen had to gothrough the traditional obstacle course, whichhelped strengthen their bonds as they gothrough the same “sufferings”.

Freshmen from other faculties, and thosetaking subjects other than Economics andStatistics, also participated in the Camp, thusensuring interaction among students of differentinclinations, interests and backgrounds.

The organizers certainly worked hard tomake this Camp a refreshing, meaningful andrewarding experience for both the freshmen andthe seniors. Well done!

T

On 26 February 1998, a group of 37students and staff traveled to Bintan Island,Indonesia, for a study tour of the island’sintegrated lifestyle resorts.

The itinerary started off with apresentation by executives from P.T. BintanResort Corporation on the developments inBintan Beach International Resort. This wasfollowed by an interesting guided tour of ClubMed Bintan’s “fun in the sun” range of facilities,and then Hotel Sedona Bintan Lagoon, anintegrated family resort with extensiverecreational amenities. After a hearty lunch,Nirwana Gardens was the next stop. TheNirwana Gardens complex included the MayangSari Beach Resort, a 56-chalet mid-marketbeachfront resort; Mana Mana Beach Club, awater sports centre with rustic village flavour;Sol Elite Bintan, a 400-room beach resort hotel;and Indra Maya, a luxurious resort vil ladevelopment sited on a scenic promontory. Avisit to the famous Banyan Tree Bintan Resortvillas provided the highlight for this educationaltour.

The programme was packaged to providethe EC2203 (Development Economics) studentswith a broader understanding of the dynamicsof economic development, and an appreciationof the latest business-related developments onthe island. The logistics support, and generoussponsorship, of Bintan Resort Management PteLtd provided the students with a veryinteresting, and very affordable, study tour.Many thanks, BRM!

EC2203 Class Goes to Bintan EC2203 Class Goes to Bintan

student activities

Economics & Statistics SocietyEconomics & Statistics Society

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focus

andidates who have done well in their M. Soc.Sci. in Economics (by research) or have a good Mastersin Economics from another university are encouragedto apply for the Ph.D. in Economics. The minimumperiod of candidature for the Ph.D. is two years andthe maximum period is five years. Research candidatesmay be admitted as full-time or part-time students.Award of the Ph.D. degree is based solely on thecompletion of a substantive research thesis of 80,000words. In addition to an internal examiner and twoexternal examiners, the candidate is required to passan oral examination based on the findings of his/herresearch thesis.

Ph.D. candidates are also eligible for ResearchScholarships. These scholarships carry monthlystipends ranging from S$1200 to S$1400. Anadditional stipend of up to S$500 per month may beawarded to selected candidates under theaugmentation scheme sponsored by industry andprofessional bodies. The scholarships are tenable for1 year in the first instance and are renewable annually,subject to satisfactory progress. The maximum periodof scholarship award is 3 years for Ph.D candidates.

ach year, the Department receives manyapplications for the M.Soc.Sci. (Economics) programmefrom students not only in Singapore, but also fromother countries. Recent years have seen manystudents from Switzerland, Hong Kong and Indonesia,graduating from the Programme. Many of ourgraduates have found excellent jobs in the public andprivate sectors, while a number have chosen to pursuePh.D. studies in top class universities abroad.

The Department’s M.Soc.Sci. (Economics)programme by coursework and dissertation is designedto equip students with the analytical expertise andpractical knowledge necessary to excel in researchand analysis positions in the private and public sectors.The programme offers a wide range of courses in boththeoretical and applied economics such asmicroeconomics, macroeconomics, econometricmodelling, mathematical economics, public finance,development economics and economic policy analysis.There is also a course on the Singapore economy.

In line with the policy to promote inter-disciplinary learning, M.Soc.Sci. (Economics)candidates may be allowed, subject to the approvalof the Department, to offer some courses from theMaster of Public Policy programme. This latterprogramme aims at developing students for positionsof leadership in the public service, and, by providing amulti-disciplinary curriculum, complements theDepartment’s programme.

The M.Soc.Sci.(Economics) is a full-timeprogramme designed to be completed within aminimum period of 12 months and a maximum periodof 24 months. With diverse career backgrounds thatrange from teaching to banking, students bring withthem a wealth of experience and cultural insights. Formany, this network of life-long friends, colleagues andassociates has proven to be one of the most valuablebenefits of participating in the Department’spostgraduate programmes.

Applicants with a good honours degree and anability to pursue research are eligible to register forthe M. Soc. Sci. in Economics (by research). Thisdegree requires a dissertation of 40,000 words, tobe completed within a maximum period of three years,and a minimum period of one year.

Candidates admitted to the Programme areeligible to apply for a Research Scholarship, which in1997/98, pays a stipend ranging from S$1200 toS$1400 per month. Successful candidates are alsoexempted from paying tuition fees.

E

M.Soc. Sci. in EconomicsM.Soc. Sci. in Economics

Doctor of Philosophy in Economics (by Research)

Doctor of Philosophy in Economics (by Research)

For more informationFor more information

C

... on the Department’spostgraduate programmes,please contact Dr Euston Quah attelephone 874-3994 or e-mailecsquahe@nus.edu.sg.

Application forms areavailable on request from theGraduate School, Faculty of Artsand Social Sciences, at:

telephone: (65)-8748036fax: (65)-7736878e-mail: gsasec@nus.edu.sg

M.Soc. Sci. in Economics(by Research)

M.Soc. Sci. in Economics(by Research)

15

In his keynote address, the Ministercautioned that despite Singapore’s robusteconomic growth of 7.8% in 1997, 1998 willbe a more difficult and challenging year, as theimpact of the regional crisis sets in. Singaporebusinesses will have to re-assess their strategicand competitive positions. The 1998 BudgetStatement has included several policy measuresto address the problems raised by businesses.However, he assured the gathering that theGovernment will continue to monitor closely theregional environment and our domesticconditions, and will take appropriate measureswhere necessary. He said that Singaporeansneed to look beyond the regional crisis andprepare to seize the opportunities, and face thechallenges that will arise after the storm hasblown over.

Mr Lee said that the CSC, established inMay 1997, and comprising mainly private sectorparticipants, has undertaken a broad review ofSingapore’s competitive position in the light ofglobal trends. Some of its recommendationsrelating to the financial sector and the Ministryof Manpower have already been accepted forimplementation. Although the Committee is stillin the process of refining its recommendations(to take greater cognizance of the regionalcrisis), the Minister gave the gathering a previewof the CSC’s strategic thinking on several issues,including the eight strategic thrusts identifiedby the Committee for Singapore’s developmentfor the next decade. These include developingmanufacturing services as twin engines ofgrowth, strengthening the external wing,developing human and intellectual capital as akey competitive force, leveraging on science andtechnology and innovation as competitive tools,and optimising resource management andbusiness facilitation. Elaborating on the lastpoint, he said that the CSC’s recommendationsare that the Government should continue toprovide a pro-business environment, maintainsound macro-economic policies, provide goodinfrastructure, and exercise flexibility in theadministration of rules and regulations. TheMinister ended his address by challengingSingaporeans to rally together and make theextra effort to achieve a quantum leap in ourcapabilities so that we can remain competitivein an evolving global marketplace.

he Annual Dinner of the Economic Societyof Singapore marks the culmination of theSociety’s activities for 1997/98. It is a majorevent for the Society, and it is also in theSociety’s tradition to invite a prominent local,or overseas, figure to deliver the KeynoteAddress to our members and their guests. Thisyear, the Society’s Annual Dinner was held on 7March 1998 at the Tower Ballroom, Shangri-LaHotel. We were indeed privileged to have asour Guest-of-Honour, Mr Lee Yock Suan, theMinister for Trade and Industry, and SecondMinister for Finance. The Honourable Ministeraddressed more than 400 Society members andtheir guests on the theme, “The SingaporeEconomy: Strategic Directions for the 21stCentury”. This was a very timely subject in viewof the on-going deliberations of the Committeeon Singapore’s Competitiveness (CSC), chairedby Mr. Lee.

In his welcoming address, Professor BasantKapur, the Society’s President, touched on theregional economic crisis, which in his view wasthe consequence of both psychological andeconomic factors. On the psychologicaldimension, he mentioned that unrestrained“greed” or “cognitive dissonance” is present.Economists refer to the latter as the tendencyof self-interested individuals to systematicallymis-calculate the risks and returns of variousactivities in accordance with their own desires,and this phenomenon as well as “short-termism”,in varying degrees characterised both borrowersand lenders embroiled in the crisis. On theeconomic dimension, it has been debatedwhether the crisis was precipitated byfundamentals, or by speculation, or by acombination of the two. Professor Kapur putthe debate in perspective by quoting from therecent analysis by a French economist, OlivierJeanne. Professor Jeanne argued that if thefundamentals enter an intermediate range,characterised by the possibility of multipleequilibra, both fundamentals and speculation canplay distinct and significant roles in precipitatinga currency crisis which “may be interpreted asa jump from a low devaluation probability..to ahigh devaluation possibility”. Speculation couldwell be contagious in such a situation, since it issufficient for each individual market participantto see that the others are speculating againstthe currency to join them, irrespective of thereason why they are doing so.

T

The Economic Society of Singapore’s Annual DinnerThe Economic Society of Singapore’s Annual Dinner

focus

forthcoming event

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The EditorEconomics NewsletterDepartment of EconomicsNational University of Singapore10 Kent Ridge CrescentSingapore 119260Fax: (65)-7752646

EditorDr Caroline Yeoh

Associate EditorsDr Ahmed M. KhalidMr Sebastian Lo

For any suggestions, feedback or otherinformation which you would like to sharewith us, just drop us a note, or e-mail us at:

ecsyeohc@nus.edu.sg or

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he 1999 Far Eastern Meeting of theEconometric Society will be held in Singapore,July 1-3, 1999. The Department of Economics,National University of Singapore, is theorganizer of the Meeting.

The Meeting is open to all economists andeconometricians, including those who are notmembers of the Econometric Society. TheProgram will consist of invited lectures andcontributed papers in economics andeconometrics, both theoretical and applied.The invited keynote speakers for the Meetingare: Professor Robert Wilson (PresidentDesignate, 1999), Professor Clive Granger,Professor Peter Phillips and Professor KiminoriMatsuyama.

Prospective contributors are invited to submitabstracts of their papers before October 5,1998. The abstract should not exceed 300words, and should include the name, affiliation,correspondence address, fax number and e-mailaddress (if available) of the author(s), as wellas up to 6 keywords and the JEL areaclassification. The full manuscript should besubmitted not later than January 11, 1999.Decisions will be based on the full manuscripts.

Abstracts and full manuscripts (in duplicate),as well as any queries, should be sent toProfessor Basant Kapur, Department ofEconomics, National University of Singapore,Kent Ridge, Singapore 119260 (fax no: 65-7752646; e-mail: ecssec@nus.edu.sg).

Web S i te :Web S i te :Web S i te :Web S i te :Web S i te :http//www.nus.sg/NUSinfo/FASS/webarts/ecs/news.htm

Important Dates :Important Dates :Important Dates :Important Dates :Important Dates :5 October 1998 Submission of

abstract11 January 1999 Submission of full

manuscript

The 1999 Far Eastern Meeting of the Econometric Society (FEMES) 1999

The 1999 Far Eastern Meeting of the Econometric Society (FEMES) 1999

T1 – 3 July 1999, Singapore

CALL FOR PAPERS

Founded 1905

Name: _______________________

Address: _____________________

_________________________________________________________

_________________________________________________________

Tel (H): ______________________

Tel (O): ______________________

Fax (if any): ___________________

Organised by

Department of EconomicsNational University of Singapore

Program Committee

Basant Kapur (Co-Chair)National University of Singapore

Kimio Morimune (Co-Chair)Kyoto University

Yiu-Kuen Tse (Deputy Chair)National University of Singapore

Tilak AbeysingheNational University of Singapore

Anil BeraUniversity of Illinois,Urbana-Champaign

Soo-Hong ChewHong Kong University of Scienceand Technology and Universityof California, Irvine

Bhaskar DuttaIndian Statistical Institute

Hian-Teck HoonNational University of Singapore

Maxwell KingMonash University

Chung-Ming KuanNational Taiwan University

Lung-Fei LeeHong Kong University of Scienceand Technology

Kian-Guan LimNational University of Singapore

Michael McAleerUniversity of Western Australia

Kazuo NishimuraKyoto University

Sam OuliarisNational University of Singapore

Joon Y. ParkSeoul National University

Garry PhillipsUniversity of Exeter

David YeungUniversity of Hong Kong

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