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ECONewsNewsletter of the Department of Economics July 2001Newsletter of the Department of Economics July 2004

Assoc Prof Tay Boon Nga

Ms Annie Koh

Ms Khatini Bte Anuar

CONTENTS

ECONewsJuly 2004 1

CONTENTS

continued on page 2

EDITORIAL TEAM OF

TH

IS IS

SU

E

Singapore’s diving fertilityrate is one of the keychallenges that Singapore

is facing and the urgency of theproblem has led to the formingof a ministerial level committeeto tackle the issue. TheEconomics Executive Program(EEP) held a one day seminar on14 May 2004 titled ‘Marriage,Fertility and the Household’ totake a closer look at this problemand the issues involved.Recognising that no onediscipline holds the monopoly tothe solution of the problem, the ten speakers for the seminar came from fivedepartments from both NUS and NTU and also include members of the publicand private sectors.

The Director of the EEP, Assoc Prof Euston Quah, started the seminar by makingintroductory remarks on how economics has a role to play in the bedroom. Henoted that like any other goods that are made at home, children have to be‘produced’. There are costs involved in the production of children, just as in theproduction of any good or service. Hence, the ‘producers’ - parents in this case- expect a net return or gain in terms of psychic income or intrinsic consumption(playing with and enjoying their children’s presence) and, for some parents,children are viewed as investment goods, that is, providing a source of monetaryincome when the child matures.

The Chairman for the morning session, Assistant Head of the Department ofEconomics, Dr Lim Boon Tiong then took over and proceeded to present thefirst speaker – Ms Charlotte Beck, Director, Family Policy Unit, Ministry ofCommunity Development and Sports. Ms Beck’s presentation was on attitudinal

Economics Executive Programme (EEP)

SEMINAR ONMARRIAGE, FERTILITY, AND THE

HOUSEHOLD

Economics Executive Programme(EEP) Seminar .............................. 1-3

Economics Executive Programme(EEP) Training Programmes ............. 3

Tan Chin Tuan Professorship ................ 4Staff Activities .................................. 4-7Staff Conferences ............................. 8-9NUS Funded Research Projects ........... 10Joint Workshop with Peking University

and Tsinghua University ................. 11Stay in Touch ...................................... 11The Second Singapore Economic

Review (SER) Lecture .............. 12-13Workshop on Maritime Economics ..... 13Staff Publications ........................ 14-17Upcoming Event ................................. 17Departmental Seminars ............... 18-19Students’ Achievements - Ong Siew Hoon ................... 20-21

- Lim Yen Pin ................................. 21- Tan Chun Yong ............................ 22- Tan Han Song, Bobby ................. 23- Tan Yew Kiat ................................ 23

MOU with Lund University ............... 24ANU/NUS Joint Honours Degree

in Actuarial Studies andEconomics ....................................... 24

From left: Assoc Prof Tan Khye Chong, Dr Lim Boon Tiong andDr Malone-Lee Lai Choo

EEP

ECONewsJuly 20042

ECONewscontinued from page 1

and behavioural trends in marriage and parenthood inSingapore derived from studies undertaken by MCDSand other selected studies. She also looked at values thatunderpin the desirability of marriage and children andcross-country comparisons of policy initiatives as well astrends in marriage and parenthood were examined.

The next speaker, Assoc Prof Tan Khye Chong, Divisionof Economics, School of Humanities and Social Sciences,NTU, spoke about the population trends in Singaporeover the medium to long term to the year 2050.Employing the component method which takes intoaccount the main demographic factors, the projectionsshowed that the local population will reach a maximumin about 20 years time before steadily declining to about3.3 million by the year 2050. Also presented was thedouble decrement table of death and marriage for malesand females.

Dr Malone-Lee Lai Choo, Department of Real Estate,NUS, next talked about the implications of the recentdemographic trends in Singapore for Urban Planning.Her paper explored these implications and examinedpossible responses in the areas of planning norms andstandards, institutional flexibility and planning choice.

After a short coffee break where the speakers and the 40participants which included numerous representativesfrom various ministries, voluntary welfare organisations(VWO) and press, mingled and exchanged their viewsand comments, the seminar continued with Assoc ProfOoi Giok Ling from NIE, NTU, giving a presentationfocusing on the range of choices and options open tofamilies and a society in a rapidly globalising world inwhich would-be parents consider job retrenchment, re-skilling and reaction against costlier and experiencedworkers. Because families appear to be coping by puttingoff the birth of children as they do their sums, considerjob security, child care options and pay off their loaninstalments for home and cars, there is the need for moreeffective public policies that appear more relevant to agrowing economy.

Dr Ho Kong Weng, Department of Economics, NUS,next gave his views on how using an economic model toconsider the costs and benefits related to the choice ofmarriage and divorce could help explain the trend thatmore Singaporeans are staying single while those gettingmarried are doing so at a later age.

A sociological insight to the fertility problems in Singaporewas what Assoc Prof Paulin Straughan from Department

of Sociology, NUS, presented. She argued that theideology of child frames parenting expectations, and overtime, these become tremendous barriers to familyformation and childrearing. Also the more societypromotes and idealize marriage and parenthood, thegreater the perceived demands on parenting. InSingapore, family ideology coexists in the same sphere ofinfluence as gender ideology, and the very powerfulideology of paid work and these contest for the allegianceof members in the society, and the outcome is a rationale-choice approach to maximize personal gains whileminimizing cost to individual.

After lunch where participants and speakers took theopportunity to discuss the ideas that had been broughtup earlier, Dr Chang Youngho, the afternoon chairman,presented the first speaker for the afternoon session – DrLiu Haoming, Department of Economics, NUS.

Dr Liu presented the theoretical and empirical findingsfrom economic analysis of women’s contribution to thesocial welfare and child development. That though genderequity is a powerful reason for empowering women,another important rationale is the common belief thatincreasing the amount of household economic resourcesunder women’s control reduces fertility and improves childdevelopment.

Dr Cheolsung Park, Department of Economics, NUS,gave a presentation which consisted of two parts. In thetheoretical first part, he discussed how economists estimatethe effects of pronatalist policies such as tax rebates andmaternity leaves on fertility. Different methods ofestimation were examined based on their assumptions andinterpretations and data structure and the estimationmethods ideal in the Singaporean context were suggested.In the second part, he discussed the findings on the effectsof pronatalist polices on fertility in other countries suchas the US, Canada, and Germany.

After Dr Park’s presentation, Ms Jeanne Cheng, GeneralManager (Services & Marketing), SP Service gave her viewof procreation from a working mother’s perspective whereshe attributed the low fertility rate among Singaporeanwomen today to late marriages and late start to familylife. With fair opportunities given to women in careerdevelopment, she argued that more are putting their careerand individual pursuits ahead of starting a family only torealize later that the timeline for having a baby or morebabies has run out.

continued on page 3

ECONewsJuly 2004 3

ECONews

EEPOur longest running client is the Ministry of Foreign

Affairs (MFA). The MFA is the primary facilitatorof delegates from signatory countries under the SingaporeCooperation Programme (SCP) - Singapore’s programmeof technical assistance to some 150 developing countries inAsia-Pacific, Africa, Middle East, Latin America and theCaribbean.

Here, the Department plays a visible, important and relevantrole through EEP. The delegates trained by EEP range frommiddle to very senior officers, with whom overseas contactsand networking for graduate programme recruitment,international projects, and related research and academicactivities are established.

We have conducted eighteen courses for MFA so far:

• Prudential Regulations of the Banking Sector(November 1999; rerun in February 2001)

• Urban and Transportation Economics (May 2000; rerunin April 2001)

• Simplification of Administrative Procedures (May 2000)

• Singapore Financial Management (June 2000)

• ASEAN Economies (July 2000)

• Public Finance and the Economic Analysis ofGovernment Sector (October 2000; rerun in April2001)

• Top Management Programme for the Promotion ofForeign Direct Investment (March 2002)

• Debt Management (December 2002)

• Economic Development Experience of Singapore(November 2001; reruns in November 2002, October2003)

• Contemporary Developments in Banking and Finance(September 2000, reruns in November 2001, 2002 &2003)

• Listed among our clientele are also the Ministry of Trade& Industries (FIREfly Agencies), Ministry of Manpower,Institute of Policy Development and Civil ServiceCollege Consultants.

Economics Executive Programme (EEP)

TRAINING PROGRAMMES WITHMINISTRIES AND STATUTORY BOARDS

The final speaker, Dr Mohamad Maliki Osman,Department of Social Work and Psychology, NUS andalso a MP for Sembawang GRC, gave a presentation usinga case study approach, where he argued that socializationprocesses would have to be re-examined to ensure thatmen and women are equipped with the skills to negotiatethese roles and rules for the development of effective andsupportive relationships in marital and family life.

After the presentation, was a panel discussion chaired byProf Lim Chong Yah, Emeritus Professor, NUS, formerchairman of the National Wage Council and Professor ofEconomics, NTU. It was a lively and engaging discussionas Prof Lim engaged the speakers and the participantswith several thought provoking questions, among them,if Singapore is on the road to mass suicide due to thedeclining fertility rate and what are the policies neededto curb this trend. Beside questions, Prof Lim also gavesome suggestions which include getting the government

to pick up the tab for education due to the importanceSingaporeans place on education and that one of the mainreasons cited why parents are not willing to have morechildren is the cost of funding for education especially athigher level. He said that the government can do this atthree different levels – free education from nursery toprimary school for the first child, nursery to A level forthe second child, nursery to university level for the thirdchild and restrict this scheme to only Singaporeans. Othersuggestions offered by Prof Lim include giving greaterrecognition to the value of being a mother.

Professor Åke Blomqvist, Head of Department ofEconomics, brought the seminar to a close with his closingremarks where he briefly touched upon the points broughtup by the various speakers and thanked the speakers andProf Lim for their time and presence. All in all, theseminar was well received by the participants and presswith positive press coverage by The Straits Times.

continued from page 2

STAFF ACTIVITIES

Prof Parkash Chander

Prof Parkash Chander was interviewed live by the BBCWorld on 16 April 2004. The topic for the one-on-

one interview was the Indo-US economic relations on theeve of the visit of the President and delegation of the USChamber of Commerce to India.

He was an invited participant for the MIT Global ChangeForum and FEEM Climate Policy Workshop held in Venicefrom June 9 to 11.

Professor Nobuhiro Kiyotaki was appointed as the

Tan Chin Tuan Professorshipfor two weeks from 25 Marchto 8 April 2004. During hisvisit, he conducted a series oflectures in his field to facultyand graduate students onmoney and finance, as well aspresented staff seminars on hisrecent work.A brief biographyof Professor Nobuhiro Kiyotakiis as follows: He obtained his

Ph.D. from Harvard University in 1985. He is one of theworld’s leading monetary theorist and macroeconomist,with publications in the top journals in Economics such asthe American Economic Review, Journal of Economic Theory,Journal of Political Economy, Review of Economic Studies,Quarterly Journal of Economics, as well as others. ProfessorKiyotaki is renowned for his seminal contributions in themicro-foundations of monetary theory. The search basedmodel of monetary exchange developed by ProfessorRandall Wright and him, has been one of the major moderndevelopments in monetary theory in understanding the roleof money as a medium of exchange. His recent work is onunderstanding the role of credit and asset liquidity inbusiness cycles. His contributions to the study ofinternational currencies; models of monopolisticcompetition (neo-Keynesian macroeconomics); and searchtheory have also been very influential.He is currently Cassel

TAN CHIN TUAN PROFESSORSHIP

Professor of Economics (Money and Banking) at theLondon School of Economics and Political Science. Priorto this, he has held positions at the Massachusetts Instituteof Technology, University of Minnesota, Federal ReserveBank of Minneapolis, University of Western Ontario andthe University of Wisconsin-Madison. His otherprofessional activities and honours include: The YrjoJahnsson Award in Economics 1999 (Biannual award bythe European Economic Association to “the best youngeconomist in Europe”), Fellow of British Academy, Fellowand Council Member of Econometric Society, CouncilMember of Royal Economic Society, Council Member ofEuropean Economic Association, Editor of Japan EconomicReview, Associate Editor of Journal of Economic Theory, andAssociate Editor of Economic Letters.A brief description ofthe Tan Chin Tuan Chair is as follows: Distinguishedacademics in the areas of Monetary Economics, FinancialEconomics or Banking and Financial Institutions are invitedto visit the Department of Economics, National Universityof Singapore under the Tan Chin Tuan Professorship inBanking and Finance. The appointment which ranges from4 to 12 months is to allow greater research and other linkagesto be forged between the Visiting Professor and theDepartment. The appointee is expected to contribute tothe research and teaching missions of the Departmentthrough giving research seminars to staff and graduatestudents, teaching at the graduate or advancedundergraduate levels in the above fields, and/or giving publiclectures. Distinguished academics will find this Professorshipbeneficial in establishing research networks with Asia.

ECONewsJuly 20044

ECONews

He chaired a session and presented a paper at the NorthAmerican Summer Meeting, 2004, held at BrownUniversity from June 17 to 20.

Assoc Prof Chia Ngee Choon

Assoc Prof Chia Ngee Choon was invited by the Medicaland Health Research Network at the University of

Hong Kong on 19th May 2004 to present a paper on“Medical savings accounts in Singapore: How much is

continued on page 5

adequate?”. The seminar was well-attended by more than80 participants from academics, hospital administrators andHong Kong government policy-makers.

On 1 June 2004, Assoc Prof Chia addressed a group ofuniversity policy makers who were visiting from the Provinceof He Nan, China on “Economic Development Experienceof Singapore” (in Mandarin).

Assoc Prof Chia was a Research Scholar at the Institute ofEconomic Research at the Hitotsubashi University underthe Japan Society for the Promotion of Science (JSPS)Fellowship for a month starting from 11 June 2004. Shewas working on pension issues and reverse mortgages forthe elderly in Japan with Prof Kitamura.

Assoc Prof Anthony Chin

Assoc Prof Anthony Chin was seconded to the LandTransport Authority through the Economist Service

of the Ministry of Trade and Industry from 1 July 2003 to30 June 2004. The Economist Service is a new scheme inthe Singapore Civil Service. It aims to attract top talent toprovide sound economic analysis and advice on a broadrange of policy issues that impact on Singapore’s macro-and microeconomic competitiveness. The EconomistService is the umbrella service for Public Sector Economistsacross the public sector, in the same way as the Legal andAccountancy Services are the umbrella services for lawyersand accountants in the public sector. The Ministry of Tradeand Industry is the lead agency driving the EconomistService. Through the Economist Service, the public sectorwill build up a core group of economic experts to enhancethe depth and scope of economic analysis of public policies.There is a need to develop a conducive microeconomicenvironment that can serve as a vibrant enterprise eco-system for Singapore and Singapore-based companies, anenvironment that nurtures innovation and wealth creation.

During his secondment to the Land TransportAuthority, he worked on various land transport issues

such as fine tuning of the Vehicle Quota Scheme, optimalroad pricing, economic development impacts from urbanrail schemes, public transport fare adjustments, competitionin the public transport area and various aspects of transportpolicies. One of the interesting projects he worked onpertains to the impact of rail infrastructure investments andits economic impacts on the area adjacent to MRT stationsand its alignment. The impacts include economic as well asland value enhancement.

ECONewsJuly 2004 5

In addition, Assoc Prof Chin has kept abreast with thefollowing academic activities through the publication ofan article entitled “Logistics outsourcing by manufacturersin China: A survey of the industry, (with Hong Junjie andBinglian Liu in Transportation Journal, Vol 43, No 1, 2004,17-25). Earlier this year he co-authored and presented apaper, The location decisions of foreign firms in China:Does transport network capacity matter? In the conferenceon “China in Transition: Issues in growth and development”held in Singapore, February 11-12, 2004.

In December 2003 Assoc Prof Chin was invited to give akeynote paper at the International Symposium onTransportation Science and Engineering for Global ChineseScholars, Beijing, China, August 27-30, 2003. The paperentitled “Public bus competition” focused on ascertainingthe nature of intra-city bus competition by exploring themarket for route and market area competition for publicbus competition in a medium-size city. More than 120prominent international and local Chinese scholars andresearchers attended the Symposium.

Prof Basant Kapur

Prof Basant Kapur delivered a talk on “The SingaporeEconomy: Development Strategy and Future

Challenges” to a group of new Civil Service officers at theCivil Service College on 18 May 2004.

Assoc Prof Euston Quah

Assoc Prof Euston Quah was appointed by the Minister of Education to be a member of the Board of Trustees,

The Institute of Southeast Asian Studies, from November2002 to November 2005. He is a committee member ofthe President’s Task Force on the Establishment of PracticeTrack Professorships at the National of Singapore from2004, and is a member of the Singapore Green Plan onClean Air, National Environment Agency since 2003.

Deputy Prime Minster, BG Lee referred to Assoc ProfQuah’s study on the social cost of smoking in Singapore inhis Budget Speech 2004.

Assoc Prof Quah’s study on air pollution costs in Singaporewas acknowledged by the Ministry of Environment as thefirst study done in Singapore.

ECONews

continued on page 6

continued from page 4

In March 2004, the Minister of Community Developmentand Sports cited his study on the cost of marriage and theimpact of procreation benefits and incentives in Parliament.

He had also contributed to the cost-benefit study on thenew national stadium and sports hub for the Ministry ofCommunity Development and Sports.

Assoc Prof Quah is presently working with Professor EzraJ. Mishan (Emeritus Professor, London School ofEconomics) to revise the well-known book, COST-BENEFIT ANALYSIS, to a 5th edition to be published byRoutledge, UK. Often referred as the standard text in cost-benefit analysis, it has been used by generations of studentsand lecturers in many universities all over the world sincethe first edition in 1971 and has remained a popular textover 4 editions since then. It is also a major source ofreference for practitioners and government. The targeteddate of publication of the 5th edition is in early 2005.

Assoc Prof Shandre Thangavelu

Assoc Prof Shandre Thangavelu is attached to theMinistry of Manpower (MOM) as the Head of the

Economics Unit where he primarily works on labour marketissues pertinent to the competitiveness of the Singaporeeconomy in the global economy. He is in charge of a teamof economist to study manpower related issues and to directmanpower policies in the Singapore economy. TheEconomics Unit in MOM has completed studies on wageflexibility, output and wage dynamics, and various issuesrelated to the labour market in Singapore.

Assoc Prof Jose L Tongzon

In February 2004 Assoc Prof Jose L Tongzon incollaboration with NUS Consulting completed a study

on maritime manpower requirements in Singapore. Thisstudy was commissioned by the Maritime and PortAuthority and Ministry of Manpower of Singaporegovernment, as an input for making Singapore anInternational Maritime Centre. It involved a comprehensivesurvey of the port, shipping companies and other maritimesectors to obtain their current employment profiles andother relevant data. Assoc Prof Tongzon’s major contributionwas his set of predictions of the future growth prospectsand employment implications of the maritime industry forthe next 15 years covering the major sectors of this industry.The major findings of the study were presented to themaritime industry in Singapore in a briefing session and

later to the press attended by journalists from majornewspapers and representatives of the relevant governmentministries/agencies.

He was a resource speaker at the 2004 Asia Pacific MaritimeSummit held on 24-25 March 2004 in Singapore Expo –considered to be one of the major international events formaritime professionals and policy makers in the region. Hewas invited to present a paper on trade trends and patternsand the challenges facing Asia Pacific maritime industry.He was also invited to be one of the panelists which wasorganized to consider the issue of free trade agreements andtheir impact on Asia Pacific industry. This event was wellattended and publicized in major Singapore newspapers andTV channels. The Summit was opened by the Guest ofHonour – Minister Yeo Cheow Tong.

Assoc Prof Jose L Tongzon was invited as a resource speakerby Korea Trade Research Association (KTRA) and the Cityof Gwangyang at the 3rd International Gwangyang PortForum, South Korea, held on 22-24 April 2004 on theoccasion of the 30th anniversary of the Association. Thetheme of the forum was on strategies for the internationaltrade and logistics-hub in Port. He presented a paper onStrategies for Developing Logistics Hubs: The Case ofSingapore. The other invited speakers from various countriesincluding Europe, North America and Asia, also presentedpapers based on their respective areas of expertise in thefield of logistics and port management.

On 10 May 2004 he was interviewed live by Channel NewsAsia on the day when Filipinos had to elect their politiciansfrom the presidential to the local levels. The topic for theinterview was on the presidential candidates and theireconomic implications for the country if elected.

Assoc Prof Peter Wilson

Assoc Prof Peter Wilson was invited to join a group oftwenty-six experts from all Commonwealth regions in

a Workshop on Economic Vulnerability and Resilience ofSmall States organized by the Commonwealth Secretariatand the University of Gozo, Malta, between 1 and 3 March2004 in the context of preparations for the InternationalMeeting for the review of the implementation of theBarbados Programme of Action for the SustainableDevelopment of Small Island Developing States (SIDS).He presented a paper on The Economic Vulnerability andResilience of Small Island States – The Case of Singapore,which will subsequently be published as part of theProceedings.

ECONewsJuly 20046

ECONewscontinued from page 5

continued on page 7

He was also invited to participate in the ClaremontConference on The Political Economy of Exchange RateRegimes under the auspices of the Freeman Programme onAsian Political Economy at Claremont McKenna Colleges,Claremont, California from April 1 to 3 April 2004. Hepresented a paper entitled: Don’t Frighten the Horses: –the Political Economy of Singapore’s Foreign Exchange RateRegime since 1981, which will subsequently be publishedas part of the proceedings.

Assoc Prof Wong Wing Keung

Assoc Prof Wong Wing Keung was invited by theUniversity of Mauritius to be an External Examiner

for their B.Sc. (Hons) Economics final year programme inapplied econometrics and quantitative methods. He wasalso invited as the External Examiner by both theDepartment of Statistics (Risk Management) and theDepartment of Economics, Chinese University of HongKong for their Masters students in 2004. He was invitedby Professor Nic Groenewold, University of WesternAustralia to jointly supervise his PhD student.

Photograph taken at Hutan Bandar, Johor Bahru

Social OutingSocial OutingSocial OutingSocial OutingSocial Outing

For the purpose of a staff get-together and teambuilding among the administrative staff of the

Department, an outing to Johore Bahru was organized inMarch 2004. Everyone had an excellent time togetherand look forward to the next outing soon!!

Thank you and Best Wishes to theThank you and Best Wishes to theThank you and Best Wishes to theThank you and Best Wishes to theThank you and Best Wishes to the

following staff who had left thefollowing staff who had left thefollowing staff who had left thefollowing staff who had left thefollowing staff who had left the

Department:Department:Department:Department:Department:

Professor Nobuhiro Kiyotaki (Tan Chin TuanDistinguished Visitor) - 8 April 2004

Professor Peter J Hammond (Visiting Professor) - 14 April 2004

Assoc Prof Wong Chung Ming (Associate Professor) - 31 May 2004

Dr Wong Siu Kee (Lecturer) - 30 June 2004

Welcome to the Department:Welcome to the Department:Welcome to the Department:Welcome to the Department:Welcome to the Department:

Dr Zhang Jie who joined as Associate Professor with effectfrom 2 January 2004. He obtained his Ph.D. from theUniversity of Western Ontario. His research covers a widerange of topics from public policy to theory, such as, theeffects and optimal designs of public programs like socialsecurity, education subsidies, public schooling, welfareparticipation, price regulation, taxation, government debt,urbanization, population aging, and genderdiscrimination.

He conducted five workshops in 2004: One to theSingapore Microcomputer Society and the TechnicalAnalysts Society of Singapore entitled “Will STI Peak in2008? – A Lesson from USA”; the second to the Departmentof Economics, The Chinese University of Hong Kong on“Was there Abnormal Trading in the S&P 500 IndexOptions Prior to the September 11 Attacks?”; the third tothe Technical Analysts Society of Singapore on “Cycleanalysis and its application on Singapore Market, Will STIgo to 4300 in 2008?”; the fourth to the East Asian Instituteon “China’s Stock Markets Going Global”; and the fifthwill be presented to Great Eastern Insurance Limited on“Wealth Management”.

He was interviewed by the Zaobao, Singapore, on 28 Aprilon the China Stock Market and this was published on 3April 2004.

He also serves as member in the Consultative Committeefor the International Statistical Institute’s Committee onStatistics in Business and Industry, Associate Editor for theJournal of Applied Mathematics and Decision Sciences, andserves as reviewers for several international journals, suchas Quantitative Finance and Review of Quantitative Financeand Accounting in 2004.

ECONewsJuly 2004 7

ECONewscontinued from page 6

Conferences attended by our staff from January to June 2004 are given below:

Staff Name

A/P Lu Ding

Dr Chang Youngho

A/P Julian DouglasWright

A/P Peter Wilson

Dr Chang Youngho

Dr GaminiPremaratne

A/P Peter Wilson

Dr Chang Youngho

Dr GaminiPremaratne

A/P Aditya Goenka

A/P Tongzon Jose

Dr Sougata Poddar

A/P Wong WingKeung

A/P Kim Yoonbai

Conference Title

ASSA/AEA Meetings

International Conference onElectric Supply Industry inTransitions Issues andProspects for Asia

The Economics of Two-SidedMarkets

Workshop “Economicvulnerability and ResilienceBuilding of Small States”organized by theCommonwealth Secretariatand the University of Malta

Asia-Europe EnvironmentForum 2nd Roundtable:Reinforcing Asia-EuropeCooperation on ClimateChange

Applied EconometricsAssociation Conference onStock Market Analysis andPrediction

The Political Economics ofExchange Rate Regimes

The International Conferenceon Electric UtilityDeregulation, Restructuringand Power Technologies

Meetings on Econometricforecasting and high-frequencydata analysis

IXth AustralasianMacroeconomics Conference

The 3rd InternationalGwangyang Port Forum andAn International Conferenceof Celebrating the 30 yearsAnniversary of KTRA

International IndustrialOrganization Conference

International Conference onBusiness, Banking and Finance

The Midwest InternationalEconomics Conference

Title of Paper

Western Region’s GrowthPotential: A GravityPerspective

Regulatory Framework ofSingapore’s ElectricityMarket

Competing PaymentSchemes

The EconomicVulnerability and Resilienceof Small Island States – TheCase of Singapore

Equity, Efficiency andEffectiveness of GreenhouseGas Emissions ReductionParadigms: Agenda forAdvanced DevelopingEconomies

Volatility Co-movement inthe Stock Markets of NorthAmerica, Europe and Asia:Some New Evidence

Don’t Frighten the Horses –The Political Economy ofSingapore’s ForeignExchange Rate Regimessince 1981

Deregulation in theNational Electricity Marketin Singapore: Competitionand Efficiency

Volatility Co-movement inthe Stock Markets of NorthAmerica, Europe and Asia:Some New Evidence

Factor intensity reversal andchaos

Strategies for DevelopingLogistics Hubs: The Case ofSingapore

On Software Piracy WhenPiracy Is Costly

ASEAN DOLLAR: ACommon CurrencyEstablishment for StrongerEconomic Growth ofASEAN Region

Exchange Rate Targetingand EconomicsStabilisation

Venue

San Diego

Bangkok, Thailand

University of Toulouse,Toulouse, France

University of Malta,Mgarr Gozo

Jeju Island, South Korea

Paris, France

Claremont Colleges,Claremont Institute forEconomic PolicyStudies, USA

Kowloon Shangri-LaHotel, Hong Kong

Singapore

Australian NationalUniversity, Canberra

Community Center,Gwangyang, Korea

NorthwesternUniversity Chicago

Spain

USA

Date

3 Jan –5Jan

14 Jan –16 Jan

23 Jan –24 Jan

1 Mar –4 Mar

25 Mar –26 Mar

1 Apr –2 Apr

1 Apr –2 Apr

5 Apr –8 Apr

5 Apr –22 May

15 Apr –16 Apr

21 Apr –23 Apr

23 Apr –24 Apr

27 Apr –29 Apr

30 Apr –2 May

CONFERENCES

ECONewsJuly 20048

ECONews

continued on page 9

Dr Chung Wankyo

A/P Tongzon Jose

A/P Peter Wilson

Dr Sougata Poddar

A/P Aditya Goenka

Prof Åke Blomqvist

A/P Wong Wing Keung

Dr Lee Jin

Dr Liu Haoming

Prof Parkash Chander

A/P Habibullah Khan

A/P Aditya Goenka

Dr Emily Cremers,Therese

Dr Gamini Premaratne

A/P Aditya Goenka

Dr Cheolbeom Park

Dr Yohannes EkoRiyanto

The Ninth Society of LabourEconomists Meetings

6th ASEAN Inter-UniversitySeminars on Social Development

Asia Pacific Economics:Miltilateral vs BilateralRelationships

Intellectual Property Protectionand International Trade

International Bond and DebtMarket Integration Conference

38th Annual Meeting of theCanadian Economics Association

8th International Congress onInsurance: Mathematics andEconomics

2004 North America SummerMeeting of the EconometricSociety

2004 North American SummerMeeting of the EconometricSociety

2004 North American SummerMeeting of the EconometricSociety

Travel and Tourism researchAssociation (TTRA) 35th AnnualConference

13th European GeneralEquilibrium Workshop

79th Annual Conference WesternEconomic AssociationInternational

Far Eastern Econometric SocietyMeetings 2004

Far Eastern Econometric SocietyMeetings 2004

Far Eastern Econometric SocietyMeetings 2004

Far Eastern Econometric SocietyMeetings 2004

Income Inequality and Health:Evidence from Indonesia

Regional Trade Agreements:Their Implications for WTOand the ASEAN countries

Prospects for Exchange RateCooperation: Why an ERMSolution might be the mostpalatable

On Software Piracy whenPiracy is Costly

International capital flowsand transmission of financialcrises

A Game Price Competitionin Pharmaticeutical Markets

The Impact of OptionStrategies in FinancialPortfolios Performance:Mean-Variance and StochasticDominance Approaches

Wavelet Transform forRegression Estimation ofnonstationary fractional timeseries

Women’s Power and ChildQuality

The Gamma-Core andCoalition Formation

The Demand for JapaneseTourists in Singapore: ACointegration Approach

Factor intensity reversal andchaos

Transfers and the Terms ofTrade in a Two-CountryDynamic Model

Stock Market Volatility:Examining North America,Europe and Asia

Are sunspots inevitable?

Precautionary Saving,Borrowing Constraints, andFiscal Policy

1) Tunneling and Propping:A Justification forPyramidal Ownership

2) On the Role of LocalContent Requirement inDefusing the Threat ofQuid-Pro-Quo FDI

San Antonio, Texas, USA

School of Social SciencesUniversiti SainsMalaysia, Penang

City University of HongKong

City University of HongKong

Institute forInternational IntegrationStudies,Trinity College,Dublin

Toronto, Canada

Rome

Brown University, RI,USA

Providence, RhodeIsland, USA

Brown University,Providence, RhodeIsland, USA

Montreal, Canada

Venice

Vancouver, B.C.

Seoul, Korea

Seoul, Korea

Seoul, Korea

Seoul, Korea

30 Apr –1May

14 May-16 May

19 May –21 May

24 May –25 May

31 May –1 Jun

4 Jun –6 Jun

14 Jun –16 Jun

17 Jun –20 Jun

17 Jun –20 Jun

17 Jun –20 Jun

19 Jun –25 Jun

19 Jun –21 Jun

29 Jun –3 Jul

30 Jun –2 Jul

30 Jun –2 Jul

30 Jun –2 Jul

30 Jun –2 Jul

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NUS FUNDED RESEARCH PROJECTS

The following NUS funded research projects werecompleted since January 2004 – June 2004:

Income Inequality and Health: Evidence fromIndonesiaby Dr Chung Wankyo

Using data from the second wave of the Indonesian FamilyLife Survey (IFLS2), this study analyses the relationshipbetween income inequality and self-rated individual healthstatus controlling for other individual, household, andcommunity health risk factors. The study finds that incomeinequality has no statistically significant detrimental effecton individual health. More importantly, this result is robustto both the difference in the distribution of public healthprovisions between areas of equal income distributions andthose of less equal income distributions and the migrationof people between them. Rather than income inequality,this study suggests that relative income has a strongerassociation with individual health.

IPO in China: Underpricing or Syndicates’Competition?by Assoc Prof Wong Wing Keung

In this paper we find that the average initial return of the961 IPOs offered between August 1991 and May 2002 is154.28%, much higher than that in any other country. Basedon the main characteristics of China stock market that thesyndicates dominate the stock prices and markettransactions, we find that the high initial aftermarket returnof IPOs in China, which is the return from the offeringprice to the closing price on the first trading day, is mainlybecause the aftermarket price is speculatively pushed up bythe competition to be the biggest shareholder among thesyndicates, but not because the IPOs are deliberatelyunderpriced lower than their true value in efficient market.The syndicates target new issues to manipulate their stockprice, or to steer the market indices, or to impawn these as

collateral for loans from banks, therefore syndicates arealways interested in IPO’s with low proportions of A-shares,small proceeds and small A-share size. The empirical testson these variables and the oversubscription rate and turnoverratio on first trading day support our analysis. Althoughwe firstly claim this explanation, the fierce syndicatemanipulation in China’s stock market is a widely-held viewby the investors and the government, and we justincorporate it into the analysis of the IPO underpricingpuzzle.

How Rewarding is Technical Analysis? Evidencefrom Singapore Stock Marketby Assoc Prof Wong Wing Keung

The results indicate that in general, the single movingaverages produce the best results, followed by the dualmoving average and the relative strength index using the‘50 crossover’ method. Note that transaction costs are notincluded in this paper. In Singapore, the main transactioncost is the commission. The commission rate variesaccording to the type of market player involved. Retailinvestors pay a flat rate of 1%. Large institutional investorslike mutual funds pay around 0.5% or less, depending onthe size of the institution. Broking firms with seats in theStock Exchange of Singapore (SES) effectively do not haveto pay any commission, although they do have to fork outa considerable sum to buy the seat. Then again the cost ofthe seat is a fixed cost and therefore there is effectively novariable cost involved for members firms of the SES.Consequently, the results are applicable more to themembers of the Stock Exchange of Singapore who effectivelydo not have to pay any commission. In general, we canconclude from the results that the technical indicators canplay a useful role in the timing of stock market entry andexits. By applying technical indicators, member firms ofthe SES may enjoy substantial profits. It is thus notsurprising that most member firms do have their owntrading team that rely heavily on technical analysis.

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Arising from a MOU signed with the School of Economics,Peking University, the Department organized a joint one-

and-a-half day Workshop on 11 and 12 February 2004. Thetheme was “China in Transition: Issues in Growth andDevelopment”. Economists from the Department, PekingUniversity and Tsinghua University examined the nature ofChinese growth and development as it transits from a socialisteconomy dominated by government linked enterprises to onebased more on a capitalist model led by the private sector,and the social and economic policies which will be requiredto sustain this progress. Selected papers from this workshopwill be published in an edited book by World ScientificPublishing Pte Ltd.

Participants of the Workshop

Prof Åke Blomqvist presenting a gift to Prof Cao Heping,Vice-President of the School of Economics, Peking University

JOINT WORKSHOP WITH PEKING UNIVERSITYAND TSINGHUA UNIVERSITY

We would like to express our sincere appreciation to all those who have contributed to this issue of the Newsletter.

We welcome your contributions on teaching, research and learning topics, as well as feedback on this issue. Please write to:ecskoha@ nus.edu.sg or ecssec@nus.edu.sg

Do we have your correct name and address? Would you like us to send a copy of the Newsletter to your friends/colleagues? Please fill in theform below and fax (67752646) to:

Mrs Annie KohEconomics NewsletterDepartment of EconomicsNational University of SingaporeAS2, 1 Arts Link, Singapore 117570

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THE SECOND SINGAPORE ECONOMIC REVIEW(SER) LECTURE

Professor John Whalley

The Second SERLecture was

delivered by Professor JohnWhalley, Director of theCentre for the Study ofInternational EconomicRelations, University ofWestern Ontario, on 5April 2004. He spoke on“Rationality, Irrationalityand Economic Cognition”.

Reproduced below is theOpening Speech by AssocProf Euston Quah, Editorof the Singapore EconomicReview.

“Distinguished Guests,Colleagues, Friends,Students, Ladies andGentlemen. Good Evening

Founded in 1956, the Singapore Economic Review(formerly, the Malayan Economic Review) is now in its 48thyear of publication. Among its distinguished contributorswere the late Sir John Hicks, Max Corden; Hans Singer;Sir Sydney Caine; Henry Wan; Herbert Grubel; HeinzArdnt; and not forgetting the late Harry Johnson. Thistradition is now carried on by renowned economists suchas Ezra Mishan; Ronald McKinnon; Jerome Stein; MurrayKemp; and Peter Lloyd in a special eminent paper series aswell as our own leading policy economist, Professor LimChong Yah, who was also Past Editor of the SER.

The journal has a wide international circulation, and amongthem include the libraries of Harvard University; StanfordUniversity; the London School of Economics; OxfordUniversity; and Cambridge University. In Australianuniversities, the Singapore Economic Review is particularlya respectable internationally refereed journal and in recentyears increased submission of papers had come from theAustralian National University; the University ofMelbourne, University Queensland; and MonashUniversity. In the mid-eighties, the journal was reportedlyranked 87 out of some 160 selected major internationallyrefereed journals by a paper published in the Journal ofEconomic Literature. Similar ranking of the journal wasalso reported in another published paper in EconomicInquiry during the same period. Although a general

economics journal, and not withstanding the importanceof publishing sound theoretically based papers; theSingapore Economic Review will continue to build on itsestablished strength and comparative advantage of appliedand policy economics pertaining to the economic problemsand issues of the Asia-Pacific region.

I am encouraged by the strong support of my co-editors,Assoc Professor Hoon Hian Teck, and Assoc Professor XingXiaolin; members of the SER Editorial Board; and theadvice from predecessor editors, two of whom are heretoday, Professor Lim Chong Yah and Professor BasantKapur; our publisher, World Scientific; Dr Khor Hoe Ee,President, Economic Society of Singapore, and CouncilMembers of the Society as well colleagues from our threeuniversities NUS, NTU, and SMU.

In 2002, the First Singapore Economic Review Lecture wasgiven by Professor David Greenaway, former Pro-ViceChancellor and Dean of Economics at the University ofNottingham. This year, we are fortunate to have ProfessorJohn Whalley as our Speaker for the Second SingaporeEconomic Review Lecture. Professor Whalley is Professorof Economics and Director of the Centre for the Study ofInternational Economic Relations at the University ofWestern Ontario, Canada. He is a Fellow of the RoyalSociety of Canada, Fellow of the Econometric Society andForeign Fellow of the Russian Academy of Natural Sciences.He is also a Research Associate of the National Bureau ofEconomic Research and Joint-Managing Editor of TheWorld Economy. Known widely for his work oncomputable general equilibrium and applications for publicfinance, international trade and development, ProfessorWhalley is a prolific writer with pioneering and scholarlyworks appearing frequently in leading journals such as theAmerican Economic Review; the Economic Journal; Reviewof Income and Wealth; Journal of Political Economy;Review of Economics and Statistics; Journal ofDevelopment Economics; Economica; Journal of PublicEconomics; Econometrica; and Journal of EconomicTheory; among others. Professor Whalley was and iscentrally involved in the many facets of the world tradingsystem including activities of WTO, World Bank, IMF,OECD, UNCTAD, among other global institutions.Professor Whalley obtained his PhD in economics fromYale University in 1973 and since then had held positionsat the London School of Economics and the University ofWarwick. Currently a Guest Professor at Peking University,Professor Whalley had recently written on a possible WorldEnvironmental Organisation and is increasingly promoting

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a possible Global Visa Organisation to help address whathe feels as a major contemporary global problem. Much ofProfessor Whalley’s work had involved the emphasis on theinterplay between pragmatic policies on the one hand, andanalytical formulations on the other. His work also stronglyreveals his long standing interdisciplinary collaborationswith lawyers, political scientists, and faculty outside thedomain of economics. I am told that Professor Whalleyenjoys walking, swimming, music, collecting clocks, takingshort but power naps and basically talking to people. I amalso informed that his current work involves working withhoneybees and bumble bees to discern new economicprinciples from their behaviour. Last but not least, on theimplications of geese behaviour for stock markets.

The subject that Professor Whalley is speaking on thisevening is increasingly on the minds of economists in thatwhether to a large extent economics can continue to explainhuman behaviour and social phenomena using our basictenets of optimisation, maximising utility, or minimisingcosts in the face of counter evidence of actual observedbehaviour and choices. Economics invariably involvesassuming that people are rational in the sense that on thewhole, they will act in their own best interests; and this inturn implies a general tendency to compare costs andbenefits of options before making choices. Applying thisseemingly intuitive approach to understanding a widevariety of human actions and behaviour such as love,marriage, fertility, divorce, and other elements in our socialenvironment from the works of Nobel Laurette Gary Becker;and to understanding legal phenomena such as tort law,contracts; and the criminal law by Richard Posner arestrongly persuasive of the reasoning behind economics andin pushing further the frontiers of what economics as adiscipline could do to assist policy and decision making.

The elegance and power of the models to explain such socialbehaviours go beyond the human world and in the seventies,a series of published papers on how birds and rats behaveto changes in prices as measured by ‘effort’ and income asmeasured by’ food endowments’—the so-called Kagelpapers— have also shown that these animals do conformto standard microeconomic theory! Being much of thispersuasion with neo-classical theory and strong believer ofutility maximising behaviour, my former colleague, DrDavid Lee and I wrote our first book while being fresh tutorsat NUS which we titled Economics: Sense and Nonsensepublished by Longman. We wanted then to disseminatethis line of thinking to as wide a general audience as possible.I am happy to note that a forthcoming article in the Journalof Economic Psychology by a French economist had citedan extended an early paper of mine on search behaviourand marriage.

In recent years however, the persistence of some counter-evidence of observed behaviour such as multiple discountrates, disparities in choices of economic evaluation;behavioural findings from economics and behaviouralfinance cannot be neglected any further. We had a samplingof this literature from Colin Cammerra and Jack Knetschwhen they were visiting NUS a few years ago. And now,Professor John Whalley adds to this quagmire by going backto the basics in questioning what do we really mean byrationality and how perhaps economists can learn frompsychologists and anthropologists in redefining the notionof rationality. He will draw on the work of Nobel LauretteHerbant Simon who had an extraordinary career in makingcentral contributions not only in economics but also inpsychology, sociology, computer science, cognition,organizational theory and several other areas. ProfessorWhalley, please.

WORKSHOP ON MARITIME ECONOMICS

The Department in cooperation with the Maritime and Port Authority of Singapore (MPA) attracted the leading maritimeeconomists from around the world to come together for two events. The first was a two-day workshop titled “The Industrial

Organization of Shipping and Ports” held on 5 and 6 March 2004. The second was an Economics Executive Programme Seminaron “Critical Issues Facing the Port and Shipping Industry in the 21st Century” held on 8 March 2004.

Among the topics discussed were the topical issue of shippingconferences (which are under attack from policymakers in the US andEurope), the implications for pricing (freight rates), port competitionin China, maritime safety and accidents, port labour issues, the networkeconomics of shipping, governance structure and port performance,and container port production efficiency. A number of the paperspresented have since been published in the June, 2004 special issue ofthe Review of Network Economics. The outside sponsor for the eventswas the Network Economics Consulting Group.

Assoc Prof Julian Wright, Chairman of the Workshop

STAFF PUBLICATIONS

THE AGGREGATE CONSUMPTION PUZZLE INSINGAPOREBy Tilak Abeysinghe and Keen Meng ChoyJournal of Asian Economics (forthcoming)

We draw attention to an apparent puzzle in the aggregateconsumption behaviour of Singaporeans. In stark contrastto the rest of the world, the average propensity to consumehas plummeted to a record low of two-fifths of income bythe year 2003, leaving the Singapore economy without adependable built-in stabilizer. This phenomenon representsa notable departure from the stable long-run equilibriumrelationship between consumption, disposable income andwealth observed elsewhere. The explanation of this puzzleis the main focus of the paper but we also suggest somepolicy measures that may reverse the process.

EDUCATION AND IMMIGRATION POLICYBy Parkash Chander and Shandre M ThangaveluJournal of Development Economics (forthcoming)

This paper explores a two-period model withcomplementarities between investment in/adoption of newtechnologies and human capital accumulation/investmentin education. Workers invest in education in the first periodand in the second period, entrepreneurs decide whether ornot to adopt a new technology. Multiple rational expectationequilibria exist: if workers believe that a large (small) fractionof entrepreneurs will adopt the new technology next period,then their return to education will be high (low) andaccordingly the level of investment in education will be high(low) too. Equivalently, entrepreneurs will adopt the newtechnology if the level of education is sufficiently high. Twopolicies are considered for ensuring that a welfare improvinghigh-technology equilibrium will prevail, namelyeducational subsidies and immigration of high-skilledworkers. A key result is that a commitment to immigrationof high-skilled is sufficient to ensure new technologyadoption.

NON-FUNDAMENTAL EXPECTATIONS ANDECONOMIC FLUCTUATIONS: EVIDENCE FROMPROFESSIONAL FORECASTSBy Keen Meng Choy, Kenneth Leong and Anthony S TayJournal of Macroeconomics (forthcoming)

It is theoretically possible that non-fundamentalidiosyncratic shocks to agents’ rational expectations are asource of economic fluctuations. Studies using data onconsumer and investor sentiment suggest that this is indeedan important source of fluctuations. We present the resultsof a study that uses forecasts from professional forecastersto extract non-fundamental shocks to expectations. Incontrast to previous studies, we show that non-fundamentalexpectations are not a significant source of outputfluctuations, although such shocks contributed to inflation.

CAN FASTER INCOME GROWTH REDUCE WELL-BEING?By Basant K KapurSocial Choice and Welfare (forthcoming)

In his book Luxury Fever: Why Money Fails to Satisfy in anEra of Excess (1999) economist Robert Frank describes anumber of significant trends in the U.S., and to a lesserextent in other industrial economies, since the late 1970’s:rapidly rising incomes, for those at the upper end of theincome scale, increasing hours of work, and increasedconsumerism (share of consumption of ‘status goods’). Wedemonstrate that the first development can parsimoniouslyaccount for the latter two. Our novel specification of theutility function simultaneously incorporates a relative-consumption effect for status goods and non-homotheticityof preferences between status and non-status goods, andwe also allow for endogenous labour-leisure choice. It ispossible that well-being has declined, notwithstanding thefaster income growth, or at least not risen pari passu withthe growth in earnings. Comparisons are made with otherstudies, and policy implications briefly discussed.

BIASED LENDING AND NON-PERFORMINGLOANS IN CHINA’S BANKING SECTORBy Ding Lu, Shandre M Thangavelu and Qing HuJournal of Development Studies (forthcoming)

This paper uses a panel data set of public listing companiesin China to empirically explore the relationship betweenbanks’ lending behavior and non-performing loans. Ourresults show that the state-owned enterprises (SOEs) gotmore loans than other firms, other things being equal, and

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SOEs with high default risks were able to borrow morethan the low-risk SOEs and non-SOEs. This suggests thatChinese banks had a systemic lending bias in favor of SOEs,particularly those with high default risks, during the periodunder investigation. Causes and implications of thisbehavior are discussed.

STOCK RETURN PREDICTABILITY AND THEDISPERSION IN EARNINGS FORECASTSBy Cheolbeom ParkJournal of Business (forthcoming)

Using monthly data for earnings forecasts by marketanalysts, this paper shows that the dispersion in forecastshas a particularly strong predictive power for futureaggregate stock returns at intermediate horizons. The resultsare robust (1) regardless of whether Newey-West or Hodrickcorrected t-statistics are used, (2) when other forecasting ormacroeconomic variables are included, (3) when differentscaling variables are used for the dispersion measure, and(4) after correcting for finite sample biases. Furthermore,additional results suggest that the dispersion in analysts’forecasts can be interpreted as a measure of the differencesin investors’ expectations rather than the risk.

THE EFFECT OF TAKEOVER THREATS ONSHAREHOLDERS AND FIRM VALUEBy Yohanes Eko Riyanto and Marco HaanJournal of Economic Behaviour and Organization(forthcoming)

We study the role of takeover threats as a corporate controlmechanism using Aghion and Tirole’s (1997) model offormal and real authority. Shareholders do not monitor themanager’s actions, since ownership is widely dispersed. Acorporate raider may monitor, and steps in if a profitopportunity exists. In our model, a takeover threat decreasesmanagerial effort. A takeover threat may increase the valueof the shares. We also look at the extent of anti-takeoverdefenses favored by individual shareholders, andinstitutional investors.

ASEAN-CHINA FREE TRADE AREA: A BANE ORBOON FOR ASEAN COUNTRIES?By Jose L TongzonThe World Economy (forthcoming)

At the ASEAN Summit in November 2000, the Leaders ofASEAN and China agreed to enhance economiccooperation and integration with the goal of establishingan ASEAN-China Free Trade Area (FTA). This decisionwas a natural response to a number of important globaland regional developments of the past decade. Since thesigning of the framework agreement, policymakers fromChina and ASEAN member states have already started theirnegotiations on the specific terms and features for thisproposed FTA. While such a FTA would hold the potentialof yielding enormous economic benefits, it also causes somesense of apprehension and uncertainty in some quarters,due to the common perception that China is already a strongcompetitor in trade and attracting foreign investment. Toexamine the economic basis for such concern, this paperanalyzes the economic implications of this proposed freetrade area from the ASEAN economies’ perspective.Specifically, it examines how competitive ASEAN countriesare vis-à-vis China, evaluates the scope for strengtheningChina-ASEAN trade and the impediments facing Chineseand ASEAN investors in each other’s markets, andrecommends policy measures to maximize the benefits andminimize the hardships resulting from an ASEAN-ChinaFTA.

A PARADIGM SHIFT FOR CHINA’S CENTRALBANKING SYSTEMBy Jose Tongzon and Connie ChungJournal of Post-Keynesian Economics (forthcoming)

Using the USA’s Federal Reserve System (FRS) as a reference,we make an assessment of China’s central banking systemby analyzing the People’s Bank of China’s (PBC) in theareas of central bank independence, conduct of monetarypolicy, conflict between monetary and fiscal objectives andits organizational, financial regulatory and supervisorysupport structures. We conclude that it needs to make aparadigm shift from its current controlled disposition toone that calls the “shots” in all central banking decisions,

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especially now that more is expected of it with Chinabecoming a member of the World Trade Organization(WTO), which has implications on the financial sector.

THE ESTIMATION OF THE COST OF CAPITALAND ITS RELIABILITYBy Wong, W K and R ChanQuantitative Finance, 4 (3), 365-372

Gordon and Shapiro (1956) first equated the price of ashare with the present value of future dividends and derivedthe well-known relationship. Since then, there have beenmany improvements on the theory. For example, Thompson(1985, 1987) combined the “dividend yield plus growth”method with Box-Jenkins time series analysis of pastdividend experience to estimate the cost of capital and its“reliability” for individual firms. Thompson and Wong(1991, 1996) proved the existence and uniqueness of thecost of capital and provided formula to estimate both thecost of capital and its reliability. However, their approachescannot be used if the “reliability” does not exist or if thereare multiple solutions for the “reliability”. In this paper, weextend their theory by proving the existence and uniquenessof this reliability. In addition, we propose the estimatorsfor the reliability and prove that the estimators converge toa true parameter. The estimation approach is furthersimplified, hence rendering computation easier. In addition,the properties of the cost of capital and its reliability will beanalyzed with ilustrations of several commonly used Box-Jenkins models.

THE RELATIONSHIP BETWEEN STOCKMARKETS OF MAJOR DEVELOPED COUNTRIESAND ASIAN EMERGING MARKETSBy Wong, Wing-Keung, Jack H W Penm, Terrell and Karen YannChing LimJournal of Applied Mathematics and Decision Sciences(forthcoming)

With the emergence of new capital markets andliberalization of stock markets in recent years, there has beenan increase in investors’ interest in internationaldiversification. This is so because internationaldiversification allows investors to have a larger basket offoreign securities to choose from as part of their portfolioassets, so as to enhance the reward-to-volatility ratio. Thisbenefit would be limited one if national equity markets

tend to move together in the long run. This paper thusstudies the issue of co-movement between stock markets inmajor developed countries and those in Asian emergingmarkets using the concept of cointegration. We find thatthere is co-movement between some of the developed andemerging markets, but some emerging markets do differfrom the developed markets with which they share a long-run equilibrium relationship. Furthermore, it has beenobserved that there has been increasing interdependencebetween most of the developed and emerging markets sincethe 1987 Stock Market Crash. This interdependenceintensified after the 1997 Asian Financial Crisis. With thisphenomenon of increasing co-movement betweendeveloped and emerging stock markets, the benefits ofinternational diversification become limited.

STOCHASTIC DOMINANCE AND THERATIONALITY OF THE MOMENTUM EFFECTACROSS MARKETSBy Fong Wai Mun, Hooi Hooi Lean and Wing Keung WongJournal of Financial Markets (forthcoming)

This paper applies recent econometric tests of stochasticdominance to examine an enduring puzzle in finance: themomentum effect in stock returns (Jegadeesh and Titman1993). We use stochastic dominance tests to distinguishbetween the hypothesis that there exists general asset pricingmodels that can explain momentum versus the alternativehypothesis that there are no asset pricing model consistentwith risk averse investors than can rationalize that effect.Using stock index data for 24 countries over the period1989-2001, we show that winner portfolios stochasticallydominate loser portfolios at second and third order. Theseresults are robust to two subperiods with different risk andreturn characteristics and survive reasonable transactioncosts for international index funds. Our results indicatethat the search for rational asset pricing explanations forthe momentum effect may be a futile one.

INCOME RANKING AND CONVERGENCE WITHPHYSICAL AND HUMAN CAPITAL AND INCOMEINQUALITYBy Jie ZhangJournal of Economic Dynamics and Control (forthcoming)

This paper presents an overlapping generations model withphysical and human capital and income inequality. It shows

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that inequality impedes output growth by directly harmingcapital accumulation and indirectly raising the ratio ofphysical to human capital. The convergence speed of outputgrowth equals the lower of the convergence speeds of therelative capital ratio and inequality, and varies with initialstates. Among economies with the same balanced growthrate but different initial income levels, the ranking of incomecan switch in favor of those starting from low inequalityand a low ratio of physical to human capital, particularly ifthe growth rate converges slowly.

AN ECONOMIC ANALYSIS OF LIFE EXPECTATIONWITH AN APPLICATION IN THE UNITED STATESBy Jie Zhang, Michael Leung and Junsen ZhangJournal of Health Economics (forthcoming)

This paper presents an economic model to explain thebehavior of life expectancy of both sexes. It explicitlyexamines the relationship between the gender gap in lifeexpectancy and the gender gap in pay. It shows that as thelatter narrows over the course of economic development,the former may initially expand but will eventually shrink.

Upcoming Event

NUS-UNIVERSITY OF MELBOURNEJOINT WORKSHOP

The fifth Annual Joint Symposium between theDepartment of Economics, NUS and the Faculty

of Economics and Commerce, University of Melbourne,will be held on 16 and 17 September 2004 at NUS.The theme of the Symposium is “Competition Policy,Information Economics and International Economics”.Speakers from the University of Stockholm, Universityof Nottingham, and University of Adelaide will alsoparticipate in the Symposium.

A brief of the Symposium is as follows: Globalization isnot a new phenomenon but the pace which it hasoccurred has increased tremendously in the past fewyears. Seen as the integration of markets, nations andtechnologies, globalization has resulted in numerouschanges in the economic landscape of the world andindividual nations. The economies of the industrialized

countries as well as developing nations are being reshapedby the rapid development and diffusion of advancedinformation and communications technologies.Deregulation and free trade agreement (FTA) are beingimplemented in many market economies to promotecompetition. International economics is also growingin importance because of the rapid integration ofinternational economic markets. Given this scenario,the main aim of this Symposium is to understand theimplications of a global marketplace on consumers,businesses and governments from the perspective ofcompetition policy, information economics, andinternational economics.

Those who are interested, may contact Ms Lim MengWoan at ecslimmw@nus.edu.sg (tel: 68743962) or MrsAnnie Koh at ecskoha@nus.edu.sg (tel: 68746012).

Simulation results from our model accord with the behaviorof life expectancy for both sexes since the 1940’s in theUnited States.

HOW DOES SOCIAL SECURITY AFFECTECONOMIC GROWTH: EVIDENCE FROM CROSS-COUNTRY DATABy Jie Zhang and Junsen Zhang

This paper investigates how social security interacts withgrowth and growth determinants (savings, human capitalinvestment, and fertility). Our empirical investigation findsthat the estimated coefficient on social security issignificantly negative in the fertility equation, insignificantin the saving equation, and significantly positive in thegrowth and education equations. By contrast, the estimatedcoefficient on growth is insignificant in the social securityequation. The results suggest that social security may indeedbe conducive to growth through tipping the trade-offbetween the number and quality of children toward thelatter.

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Staff Seminars presented by our staff and other economists from August to November 2003

Presenter

Dr Ramkishen S. Rajan, Senior Lecturer,School of Economics,University of Adelaide

Professor Michael McAleer,School of Economics,University of Western Australia

Dr Marco Haan, Department of Economics,University of Groningen, the Netherlands

Mr Minn Naing Oo, Deputy Director / LegalAdvisor, Trade Directorate (B), Ministry ofTrade and Industry, Singapore

Professor Henry Tulkens,Université Catholique de Louvain

Mr Chun-Seng Yip,University of Pennsylvania

Professor Shmuel Nitzan,Department of Economics, Bar-Ilan University

Mr Ricard Gil,University of Chicago

Dr Jangryoul Kim,Federal Reserve Bank of Minneapolis

Dr Huiwen Lai, SAS Institute Inc.

Dr Chenghu Ma, Reader,Department of Accounting, Finance &Management, University of Essex

Dr Andrew Warner,NBER

Assoc Prof Aditya Goenka,Department of Economics, NUS

Mr Jingfeng Lu,University of Southern California

Topic

Managing New-Style Currency Crises:The Swan DiagramApproach Revisited

Why Are Crisis-Induced Devaluations Contractionary?Exploring Alternative Hypotheses

Asymmetric Generalized Autoregressive ConditionalCorrelation

Consumer Boycotts

The Singapore approach to FTAs in a multilateral trading world

(Joint Departmental + Graduate Seminar)

Cooperative Games and Dynamic Models of InternationalEnvironmental Problems

Job Search and Labor Force Participation in Equilibrium:Theory and Estimation

Lobbying and Transparency

Decision Rights Allocation in the Movie Industry:Understanding Vertical Integration

Quest for Optimal Monetary Policy

U.S. Exports and Multinational Production

Mean-Preserving-Spread Risk Aversion and CAPM

Once more into the breach: economic growth and globalintegration

Factor Intensity Reversal and Chaos

Stochastic Private Values in Auctions: Identification andEstimation * (via Video Conferencing)

Date

14 Jan 04

15 Jan 04

27 Jan 04

29 Jan 04

3 Feb 04

10 Feb 04

17 Feb 04

18 Feb 04

19 Feb 04

24 Feb 04

26 Feb 04

2 Mar 04

3 Mar 04

9 Mar 04

STAFF SEMINARS

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continued on page 19

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Professor James Markusen, Department ofEconomics, University of Colorado, Boulder

Mr Ryuichi Tanaka, New York University

Assoc Prof Jinpeng Ma, Department ofEconomics, Rutgers University-Camden

Professor Rabah Amir, CORE

Associate Professor John Morgan,Hass School of Business, University ofCalifornia, Berkeley

Dr Changhui Kang,Department of Economics, NUS

Professor R. G. Gregory,Research School of Social Sciences,Australian National University

Professor Bjarne S. Jensen,Copenhagen Business School

Professor Nobuhiro Kiyotaki,Tan Chin Tuan Distinguished Visitor,Department of Economics, NUS

Dr Mau-Ting Lin,Department of Economics, NUS

Professor Nobuhiro Kiyotaki,Tan Chin Tuan Distinguished Visitor,Department of Economics, NUS

Assoc Prof Wong Wing Keung,Department of Economics, NUS

Assoc Prof Trichy V. Krishnan,NUS Business School

Professor Peter J. Hammond,Stanford University; Visiting Professor,Department of Economics, NUS

Dr Younghwan In,Department of Economics, NUS

Assoc Prof Nicolaas Groenewold, Dept ofEconomics, University of Western Australia

Assoc Prof Kim Yoonbai,Department of Economics, NUS

A Multi-Country Approach to Multi-Stage Production

On the Costs and Benefits of a Mixed Educational Regime

Jobless Recovering and Equilibrium InvoluntaryUnemployment with a Simple Efficiency Wage Model

Market Structure, Scale Economies and Industry Performance

Brand Awareness and Price Competition in Online Markets(Joint Seminar with Dept of Business Policy)

University Prestige and Choice of Major Field: Evidence fromSouth Korea

Exploring the Impact of Interrupted Education on Earnings:The Educational Cost of the Chinese Cultural Revolution

General Equilibrium Dynamics of Multi-Sector GrowthModels

Liquidity, Business Cycles, and Monetary Policy

Maximum Likelihood Estimation of Linear RationalExpectation Model with Unique Stable SolvabilityConstraints

A Model of Job and Worker Flows

On the Estimation of Cost of Capital and its Reliability

Bypassing the Dominance of Big Manufacturers:A Recent trend in Supplier Strategy

History: Sunk Cost, or Widespread Externality?

A Fictitious Play of the Nash Demand Game Implements theNash Bargaining Solution

Consumption and Stock Prices: Can We DistinguishSignalling from Wealth Effects?

Exchange Rate Targeting and Economic Stabilization: AnEmpirical Exploration

16 Mar 04

17 Mar 04

18 Mar 04

19 Mar 04

22 Mar 04

23 Mar 04

24 Mar 04

25 Mar 04

30 Mar 04

1 Apr 04

6 Apr 04

7 Apr 04

8 Apr 04

12 Apr 04

13 Apr 04

15 Apr 04

20 Apr 04

continued from page 18

STUDENT ACHIEVEMENTS

ONG SIEW HOON- SPECIAL ACHIEVEMENT

I was thrilled when I was offered a place in the

Arts and Social Sciencesfaculty at the NationalUniversity of Singapore(NUS) in June 2001. As Iam suffering from CerebralPalsy, there was the feelingof uncertainty and I didnot have the slightest ideaof what to expect out of mythree years of education

here. But one thing was sure for me: I wanted to major inEconomics because it really interests me then. I was gladthat I had made the best out of my three years of varsity lifein NUS and managed to graduate with a Bachelor of Arts(Economics Major) degree with Merit.

I have had to struggle to get where I am because I had towork harder than normal students and persevere. Insteadof taking down notes during lectures, I taped the lecturesand transcribed them at home by myself so that I canunderstand the contents. If time were running out for me,I would just listen to the tapes one or two weeks before theexams to get the main ideas, not to leave out going throughthe lecture notes and tutorial answers. Despite my physicaldisability, I had been able to submit all my past term projectsor assignments on time without asking for extension ofdeadline. I was able to do so by sacrificing a few hours ofmy sleeping time and leisure time of watching televisionprogrammes. I felt that the sacrifices I made wereworthwhile and my efforts were certainly paid off.

I was blessed with some Economics major friends who werevery warm and helpful towards me since year one of mystudy. They would willingly lend me their lecture notes tozap especially for modules like EC3151, EC3152 andEC3231, which were very mathematical. We guided oneanother along the way for the modules that we tooktogether. Thus, they had an impact on my performancetoo. They would also cheer me up whenever I was down orstressed up.

Although I have some speech disturbances, I tried tocontribute my ideas and answers whenever I could duringtutorial discussions and presentations. Apart from gainingsome participation marks, I knew that I had learnt

something useful at the end of the day. I was grateful tomost of my tutors, who were very tolerant towards me.They really made an effort to decipher what I was sayingand repeated my points to the class. In addition, they wereapproachable and friendly, making it easy for me to go tothem for clarifications. At the start of each semester, theEconomics modules that I took seemed intricate in thebeginning but most of my lecturers were willing to helpme at every step of the way (for example, giving mepermission to tape their lectures, making mid-term specialarrangements in the Silcock Journal Room) and I managedto pull through.

Though my parents left me to handle my studies by myself,it was sometimes demoralizing when my results were notup to my expectations. But I often told myself that thegrade should serve as a motivation for me to fight on andnever give up on the module. On occasions when I did notscore satisfactorily in my Economics mid-term tests, I aimedto do better the next time round for the final examinations.

It was mentally draining for me to study for examinations.I was being cooped up in my room for almost the wholeday and had to give up usual activities like watchingtelevision programmes and shopping. Since I could betterconcentrate in the quiet of the night, I usually stayed uptill 2:00 am during the Reading Period to study. When mymind was tired, I would stop and do something else - enjoysome music or chat with my parents. Of course, a cup of“Lipton” tea or a bottle of “Brands” Chicken Essence wasalways at hand to keep me awake.

I admit that it was difficult to score good grades forEconomics. Memorizing the textbook or lecture notes foran Economics module and regurgitating it during theexaminations did not guarantee good grades. What I havelearnt from Economics during these three years is to trulyunderstand what is being taught and being able to applythem to real world or hypothetical situations. Beingsomeone who does not believe in wasting time, I wouldnot dwell on any topic that I could not understand. I wouldmove on to other topics before returning to that topic again.I feel that no one can understand everything in this worldand it may not be worthwhile pouring all the time andeffort into one topic and neglecting others. It is alsoimpossible to study everything within one or two weeks.My advice to others is to study smart and manage theirtime well so that most materials can be covered. I had cometo realize that the mid-term questions or topics are unlikelyto appear again in the finals for Economics.

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Though I was not a straight ‘A’s Economics student, I felthappy and was contented with the overall results that I hadachieved. Considering the handicap I had to deal with andsince Economics required a lot of thinking and applicationskills, my overall results showed that I was capable of doingthe work as well and often better than other Economicsstudents. I was able to do so because I received a helpinghand from God, lecturers, tutors, Economics major friendsas well as my Church friends from the “Tabernacle University

Fellowship” who were always there to pray for me and giveme encouragement.

In short, I have no regrets looking back my varsity life becauseI know that I have made good use of my knowledge inEconomics to give my best in whatever I do. I consideredgetting a Bachelor of Arts degree a personal accomplishmentfor me and I attributed my achievement to”“hard work andsacrifice”. I hope to find a permanent job after graduationand, in time, go into the area of research or statistics.

My decision to study Economics at university surprisedmany friends. Reading Science subjects at junior

college, most of my peers went on to pursue degrees inEngineering or the Physical Sciences. In fact, on my way tosit for my final Economics paper in April, I had a busy timeexplaining to a former JC classmate that I had been majoringin Economics for the past four years.

The time spent on studying Economics has been mostenjoyable and intellectually stimulating. My analytical andreasoning skills have certainly been honed through integratingcurrent economic issues with complex models. No longerwas I simply memorising principles and theories word-for-word; Instead, I found myself trying to understand themthoroughly so as to apply them flexibly. For this, I amimmensely grateful to all my lecturers and tutors for theirinspiring lessons, patient guidance and dedication. Despitetheir hectic schedules, they have always been forthcoming inclearing my doubts. Their tireless efforts in probing andunderstanding the rationale of my, at times, flimsy argumentshave truly sharpened my mind and propelled my passion forthe subject.

A special note of appreciation goes out to Assoc Prof AlbertTsui, my honours thesis supervisor who also taught meFinancial Economics. I would not have been able to completemy thesis successfully without his invaluable advice,continuous support and encouragement. His constant effortsin ensuring that I grasped the correct approach to problemsolving have indeed enriched my learning experience

I also thank Assoc Prof Peter Wilson for supervising myIndependent Study Module (ISM) and sharing his insightsand expertise on Optimum Currency Areas. His knowledge

in the field ofI n t e r n a t i o n a lEconomics has alsospurred me to readbeyond the texts.Another person whomI am thankful to is DrZhu Lijing. Besidessupervising my firstISM, he also went outof his way to ensurethat I gained wideexposure in mylearning, resulting inmy participation inthe Asia Institute ofPolitical Economic(Hong Kong) two years ago.

Prof Basant Kapur’s lessons have truly been memorable, ashis quick thinking and enthusiasm in Macroeconomics weretruly invigorating and never failed to engage my interest. Ihave also greatly benefited from my other lecturers and tutorswho were always able to explain new concepts clearly. Theyinclude: Dr Younghwan In, Dr Lim Boon Tiong, Dr LiuHaoming, Dr Wong Siu Kee and Assoc Prof Xing Xiaolin.Many thanks go out to the staff of the EconomicsDepartment as well.

These four years as an Economics student at NUS have beenrewarding and gratifying. I never once regretted my choice,but I would not have been able to make it so far without theunwavering support from my family and friends. I thank allof you from the bottom of my heart.

LIM YEN PIN- WINNER OF THE RACHEL MEYER BOOK PRIZE AND MONETARY AUTHORITY OF SINGAPORE BOOK PRIZE

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Markets’ anticipation of interest rate hikes by the U.S.Federal Reserve, rising oil and commodities prices,

massive jobs outsourcing and the engineering of a softlanding for the overheating Chinese economy. Theabovementioned are some major economic concerns ofmany nations at the point of penning this article. As Ireflect back in time, I recall that in my younger daysmacroeconomic issues did not catch much of my attentionwhenever I browse the daily papers. Even if they did, Iwould have made little sense of the huge consequences thatthey can have on the livelihood of people. Many thanks tothe rigorous Economics training undergone in NUS, I cannow analyze the causes and impacts of such phenomenonwith a much deeper set of understanding.

For me, deciding to major Economics in NUS was no greatdifficulty simply because Economics interests me muchmore than the sciences. Initially, I entered NUS with anaïve mentality that studying Economics was plainly aboutcomposing lengthy essays that commence with precisedefinitions explaining key terms in the questions, andpresenting arguments supported by little diagrams ofdemand and supply curves. I expected Economics to bemuch like what we were taught to do in junior colleges. Iwas wrong and was in for a shock. Instead, Economics atthe tertiary level was largely mathematical in nature and asdescribed in the candid words of Prof Basant Kapur, “theconcepts must tally algebraically, geometrically andeconomically” (An interesting remark that I had noted inProf Kapur’s class. Unfortunately, I was unable to rememberexact word for word and the above statement represents avague idea of what I can recall). I soon adapted to theunexpected changes and fell in love with the mathematicaland analytical challenges of Economics. Being a practicalperson rather than an abstract thinker, Econometrics appealsto me strongly for it provides me with a powerful tool forempirical studies. As I looked back over the four years, Imust admit that the Economics education had helped medeveloped strong quantitative and analytical capabilities aswell as an inquisitive mind. Overall, it was an enrichingand fulfilling experience.

I would like to make special use of this opportunity toexpress my heartfelt gratitude to my honours thesissupervisor, Assoc Prof Shandre M Thangavelu. Certainly,he has been very encouraging and offered me much systemic

TAN CHUN YONG– WINNER OF THE YOU POH SENG PRIZE IN ECONOMETRICS

guidance in completing the demanding dissertation. Hisconfidence in me has spurred me to excel in my work andprompted me to look into the possibility of furthering mystudies. A word of thanks to Assoc Prof Hui Weng Tat forallowing me a chance to learn much about academic researchas a research assistant. Not forgetting all other committedlecturers in the Economics Department who have dedicatedtheir lives to make learning in NUS fun and challenging, abig thank you to all of you too.

As a Chinese saying goes: “When one is at home, he relieson his parents. When he is out of home, he would have todepend on the friends around him”. What a marvellousand true proverb! Indeed, I would not have achieved whatI have achieved in NUS without the peers around me whoconstantly motivated me to strive beyond what I canaccomplish. The numerous hours of intellectually gratifyingdiscussions as well as the lighthearted ‘canteen breaks’ havedefinitely made our university life rewarding andmemorable. To Jerel, who has been the best of friends inour pursuit of the Economics degree, no amount of wordscan express my deepest appreciation for your motivationand friendship throughout the four years. Finally, I amalso immensely grateful to my family for their unwaveringsupport and encouragements.

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Tan Chun Yong (front man) and friends of the Economics HonoursProgramme.

My choice to major in economics was predeterminedbefore I matriculated into NUS, as I accepted a PSC

for scholarship to read economics. I had enjoyed economicsat JC level and opted for it as my first choice at thescholarship interview. Nonetheless, I was initiallyoverwhelmed b y the array of mathematical notations thatwas used in the teaching of economics. After four years of Istudy in the NUS economics program, I am glad to say thatI do not regret my choice. Not only have I learnt more aboutthe world we live in, my training in economics has taughtme valuable skills that will be handy in the future.

Economics as a discipline combines the use of simpleconceptual frameworks with the extensive utilization ofmathematical tools. As such, it is often misunderstood astoo abstract and/or too simplistic to be applicable to actualsocial phenomenon. However, through the efforts of thetutors in the Economics Department, I managed to see theapplicability of various economic concepts, from job searchtheory to imperfect information, and to appreciate thereasoning behind the equation and matrices.

At the same time, I feel that the value of the economicsprogram goes beyond the enrichment of my knowledge (asprecious as it is). The quantitative approach that was used

TAN HAN SONG, BOBBY- WINNER OF THE LIM TAY BOH MEMORIAL MEDAL

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It did not take me long in my first year to realize that Ihave entered a mathematics course instead. The modules

were challenging, especially Macroeconomics andEconometrics and I was determined to excel in them. Buthaving to work through complex equations of the modelsis not something I imagined doing on a weekend; well, atleast not until Professor Basant said, “… be rigorous tofully appreciate the elegance of the model.”

Inspired, thereafter I would even leap out of bed wheneverI suddenly thought of solutions to difficult tutorials or ideasfor research. The realm of economics never ceases tofascinate me: I was to discover my passion in Public Financeunder the dedicated guidance of Associate Professor ChiaNgee Choon. The thesis ranks as the most memorable andmeaningful assignment in my honours course. Despite thearduous process of data collection and the nerve-wreckingmoments when the computer hangs while runningsimulations, the invaluable insights, together with the sheerpride on completion of the thesis made it all worthwhile.

I take away from these four years in Economics not just awealth of knowledge but also a network of good friends

and memories of exceptional lecturers. I found the disciplineboth intellectually fulfilling and enjoyable. In future, thoughI may not solve a Lagrangian when making my purchases,nor have a dozen children just to better ensure I have enoughto spend in my elderly years, the economic education I havereceived has equipped me with the knowledge and abilityto make sound decisions.

TAN YEW KIAT- WINNER OF THE JOANNA WONG GOLD MEDAL AND ECONOMICS SOCIETY OF SINGAPORE GOLD MEDAL

in many of the courses enabled me to handle quantitativedata with ease, while the attention to economic logicsharpened my critical thinking skills. Special mention mustalso go to my thesis supervisor, Professor Basant Kapur, whoencouraged me to think widely yet thoroughly on a varietyof issues, while retaining the focus on the big picture. Finally,I am grateful to all my friends: those in the economicsprogram, for taking time to help me with many of thecourses; and those outside the program, whose seeminglyinnocuous questions about economics made me think harderand deeper about the discipline.

Bobby Tan standing at the right corner.

Tan Yew Kiat, second left from the front row.

AUSTRALIAN NATIONAL UNIVERSITY (ANU) /NATIONAL UNIVESITY OF SINGAPORE (NUS)

JOINT HONOURS DEGREE IN ACTUARIAL STUDIESAND ECONOMICS

The Joint Degree programme in Actuarial Studies andEconomics is offered by the School of Finance and

Applied Statistics, Faculty of Economics and Commerce,ANU and the Department of Economics, Faculty of Artsand Social Sciences, NUS, leading to the degree of ANU /NUS Bachelor of Social Sciences with Joint Honours inActuarial Studies and Economics. A student in thisprogramme will spend four semesters at NUS (foreconomics and the foundational courses) and four semestersat ANU (for the actuarial courses).

The programme contains the core of the EconomicsHonours curriculum as well as the actuarial education thatgrants students who perform sufficiently well exemptionsfrom parts 1 and 2 of the professional examinations of theInstitute of Actuaries of Australia (IAAust). (For moreinformation on the actuarial education and profession,please go to http://www.actuaries.asn.au/). The programmealso includes elements of the NUS broad-based curriculum.

For NUS students, semester 1 of the programme will beginat NUS. Students will spend their first three semesters atNUS, joining ANU in their fourth semester. The eighthand final semester will be spent at NUS.

Outline of the ProgrammeStudents might be able to alter slightly some of thesequencing in the table below. However, all the listedmodules must be completed. In addition, students arerecommended to take MA1102R Calculus. Studentsenrolled on the programme who elect to take this modulewill be permitted to waive the requirement of a secondexposure module.

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In May 2004, Professor Lars Soderstrom, Head of theDepartment of Economics, School of Economics and

Management, Lund University (LUSEM) and Professor ÅkeBlomqvist, Head of the Department of Economics, NationalUniversity of Singapore (NUS) signed an Agreement forDepartment-level Exchange Programme for students for a

period of three years. LUSEM and NUS are to establish anundergraduate and a postgraduate exchange programme forstudents (SEP). The exchange of students will commencein the 2004/2005 academic year. A selected student mayparticipate in the SEP for one semester or academic year ofstudy at the host university.

MEMORANDUM OF UNDERSTANDING (MOU)BETWEEN DEPARTMENT OF ECONOMICS, LUNDUNIVERSITY AND DEPARTMENT OF ECONOMICS,

NATIONAL UNIVERSITY OF SINGAPORE

Semester 1 EC1101E Introduction to Economic AnalysisNUS EC2303/EC2231 Foundations for Econometrics

BH1002 Financial AccountingMA1101R Linear Algebra 1FASS exposure module

Semester 2 EC2101/EC2151 Microeconomic Analysis INUS EC2102/EC2152 Macroeconomic Analysis I

EC3303/EC3231 Econometrics IBH2004 Finance1 of GEM / exposure / Singapore Studies

Semester 3 EC3101/EC3151 Microeconomic Analysis IINUS EC3102/EC3152 Macroeconomic Analysis II

EC3304/EC3237 Econometrics II1 of GEM / exposure / Singapore Studies

Semester 4 BUSN1002 Accounting Process andS syetsmANU STAT2001 Introductory Mathematical Statistics

STAT3037 Life ContingenciesSTAT2032 Financial Mathematics

Semester 5 STAT3032 Survival ModelsANU STAT3004 Stochastic Modelling

FINM2002 Financial Instruments and Risk ManagementSTAT3038 Actuarial Techniques 2

Semester 6 STAT4031 Actuarial Control Cycle 1ANU STAT3035 Risk Theory (Distributional Models)

FINM3001 InvestmentsFINM3003 Continuous Time Finance

Semester 7 STAT3036/ST8036 Credibility TheoryANU STAT4032 Actuarial Control Cycle 2

1 elective module (e.g. STAT2009 Generalised LinearModels)

1 elective module (e.g. STAT3014 Statistical Inference)

Semester 8 EC4101/EC4151 Microeconomic Analysis IIINUS EC4102/EC4152 Macroeconomic Analysis III

EC4401 Honours Thesis (8 MCs)4 more MCs from Economics Level 4000 module