The Aggregate Consumption Puzzle In Singapore

Tilak Abeysinghe () and Keen Meng Choy ()

Departmental Working Papers from National University of Singapore, Department of Economics

Abstract: We draw attention to an apparent puzzle in the aggregate consumption behaviour of Singaporeans. In stark contrast to the rest of the world, the average propensity to consume has plummeted to a record low of two-fifths of income in 2000 leaving the economy without a good built-in stabilizer. This phenomenon is a notable departure from the stable long-run equilibrium relationship between consumption, disposable income and wealth observed elsewhere. The explanation of this puzzle is the main focus of the paper but we also draw attention to some policy measures that may reverse the process

Keywords: consumption function; average propensity to consume; cointegrating relation; asset price inflation (search for similar items in EconPapers)
JEL-codes: C52 E21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-sea
Date: 2002
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Journal Article: The aggregate consumption puzzle in Singapore (2004)
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Persistent link: http://EconPapers.repec.org/RePEc:nus:nusewp:wp0213

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