Abstract
This paper attempts to estimate the extent of distortions in the Singapore economy and its major sectors using an applied general equilibrium model. Key parameters are estimated using observed data for the period 1968-2002 and injected into the model. The parameters of the constant-elasticity-of-substitution production function and the Armington elasticities are estimated using time series techniques. Based on estimated elasticities and an estimated social accounting matrix for the year 1995, the model finds the average wage rate and real rental rate that clear the factor markets. The level of distortions is computed as the gap between the observed factor prices and the values found by the general equilibrium model.
Keywords: Factor markets, CGE model, Singapore
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