The ESU01 model consists of 62 equations (endogenous variables) supplemented by 35 exogenous variables. The exogenous variables include a large number of policy variables such as the CPF contribution rates and tax rates that can be used for policy simulations. The model consists of four major blocks of equations—domestic demand, external trade, labour market and major sectors. While the main model can be used to simulate the impact of events like oil price shocks or new policies on a large number of variables of interest at a macro level, satellite models can easily be attached to the main model to carry out the analysis at a more disaggregated level.
Another model called the ESU multi-country model, developed by Tilak Abeysinghe, provides the forecast inputs to the ESU01 model on the output growth of Singapore’s major trading partners.
The ESU01 model will appear in a research monograph entitled “The Singapore Economy: An Econometric Perspective” written by Abeysinghe and Choy and to be published by Routledge.
The book is innovative in a number of respects. Due to the peculiar characteristics and features of Singapore’s economic history and development, Abeysinghe and Choy were sometimes forced to approach the econometric modelling in unconventional ways. As a result, the book offers a novel approach to macro-modelling of a small open economy. At the same time and unlike books in this genre, they have taken great pains to discuss the economics behind the econometrics and to present rare insights into the Singapore economy gleaned from formal econometric analysis. This is also the first macroeconometric model of the Singapore economy to be released to the public in its complete form.
The model, key findings, policy implications, multipliers, and policy simulations on a closed-door foreign worker policy, the exchange rate policy, and long term growth prospects are presented through nine chapters supplemented by two extensive appendices, one describing data construction methods and the other presenting the model equations.
ESU now comes under SCAPE (Singapore Center for Applied and Policy Economics). For ESU research activities visit: http://nt2.fas.nus.edu.sg/ecs/cent/cent.asp