ECONOMIC DEVELOPMENTS
AND MONETARY POLICY
     
Content Page
 
.
.
US: Vibrant Pace . Europe: Mixed
.
.
Box 15 – Debunking the Deflation Myth in Singapore . International Financial Markets: Broad Recovery Amid Uncertainty
.
.
Box 16 – Exchange Rate and Macroeconomic Volatility . Monetary Policy in an Increasingly Volatile Environment
.
.
Recent Policy Research and Analysis Against the Backdrop of More Frequent Shocks . Box 17 – Creating an Electronics Leading Index
 
Box 17
CREATING AN ELECTRONICS LEADING INDEX
 
Given the importance of the electronics industry to the Singapore economy, the MAS Economic Policy Department has been tracking a series of indicators pertaining to the global electronics industry. We embarked on an empirical study last year to construct a composite electronics leading index (ELI) that can generate quantitative forecasts of domestic electronics production2. The index includes both US and domestic indicators and is able to capture demand and supply dynamics by incorporating information on new orders, shipments, inventories and prices.

The development of the ELI possibly represents a first attempt at using rigorous econometric techniques to select the best plausible set of leading
indicators, which can be combined to provide a useful assessment of global electronics activity.
 
2 MAS Staff Paper No. 30 Using Leading Indicators to Forecast the Singapore Electronics Industry.