The aggregate consumption puzzle in Singapore
The aggregate consumption puzzle in Singapore
The aggregate consumption puzzle in Singapore
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568 T. Abeys<strong>in</strong>ghe, K.M. Choy / Journal of Asian Economics 15 (2004) 563–578<br />
sample, the start<strong>in</strong>g value of equities is taken to be two-fifths of the amount of bank<br />
deposits at the end of 1976.<br />
Nom<strong>in</strong>al hous<strong>in</strong>g and f<strong>in</strong>ancial wealth were deflated by the CPI to arrive at their real<br />
counterparts, HW t and FW t. Fig. 3 plots each of these series and their sum, W t.<strong>The</strong><br />
figure shows that household wealth grew relatively slowly <strong>in</strong> the 1980s, picked up<br />
sharply <strong>in</strong> the 1990s as asset and house prices rose, and then fell dur<strong>in</strong>g the Asian<br />
f<strong>in</strong>ancial crisis of 1997–1998. Aggregate wealth rebounded strongly after the crisis, only<br />
to decl<strong>in</strong>e aga<strong>in</strong> with the onset of economic recession <strong>in</strong> 2001.Us<strong>in</strong>g the data series<br />
graphed <strong>in</strong> Figs. 2 and 3, OLS regressions of <strong>aggregate</strong> <strong>consumption</strong> expenditure on<br />
disposable <strong>in</strong>come and the different wealth variables for the period 1978Q1 to 2003Q4<br />
are reported below:<br />
ln Ct ¼ 1:06<br />
ð11:9Þ<br />
þ 0:64<br />
ð13:7Þ<br />
ln Ydt þ 0:14 ln Wt; (7)<br />
ð3:86Þ<br />
R 2 ¼ 0:988; SE ¼ 0:049; CRDW ¼ 0:28; ADF ¼ 2:21;<br />
ln Ct ¼ 1:22 þ 0:78<br />
ð12:6Þ ð26:8Þ ln Ydt þ 0:03<br />
ð1:63Þ ln HWt; (8)<br />
R 2 ¼ 0:987; SE ¼ 0:052; CRDW ¼ 0:29; ADF ¼ 1:96;<br />
ln Ct ¼ 0:88<br />
ð9:54Þ<br />
Fig. 3. Measures of household wealth <strong>in</strong> S<strong>in</strong>gapore.<br />
þ 0:49 ln Ydt þ 0:28<br />
ð8:44Þ ð5:85Þ ln FWt; (9)<br />
R 2 ¼ 0:990; SE ¼ 0:046; CRDW ¼ 0:34; ADF ¼ 2:93: