Abstract
Singapore's recent trade record has some paradoxical results. Exports have increased when the Singapore dollar has appreciated by a significant margin, arguably due to real exchange rate (RER) misalignment. This article offers explanations for this unusual outcome by simulating a computable general equilibrium (CGE) model of the Singapore economy to identify factors that may have influenced RER misalignment. Among the factors examined we find that overseas demand plays a pivotal role in the growth of Singapore's exports. This finding has important implications for Singapore in the light of growing economic uncertainty in the Southeast Asian economies. Research for this study was completed before the full impact of the 1997 financial crisis; follow-on research may illuminate the effects of the crisis on the results presented here.
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