Current Account
SINGAPORE'S CURRENT ACCOUNT
Singapore has been accumulating current account surpluses since 1988. As of 2006, the surplus stands at 27% of GDP, one of the biggest in the world. This paper seeks to examine the reasons behind Singapore's extensive current account surplus, and discusses the benefits and problems the surplus has on the economy. We will then review the monetary policy of the Monetary Authority of Singapore (MAS) and discuss the potential measures MAS should undertake in the face of the huge current account surpluses.
The current account will be examined from two perspectives. The first is based on the national income and production accounts. This approach shows how changes in a nation's saving and investment are reflected in the trade and current account balance. The current account balance is measured by the difference between national saving (S) and domestic investment (I).
Current Account = S- I or Current Account = SPrivate I + (T-G)
The current account......
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Approximate Word Count: 3031
Approximate Pages: 13 (250 words per double-spaced page)
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