I was just reading my economics notes when I stumbled upon this paragraph:

Singapore has a very open economy and imports most of its inputs and necessities, which means that MPM is likely to be very high. Also, Singapore has a high savings rate due to its compulsory savings scheme, leading to a high MPS. The high marginal propensity to withdraw means that the multiplier k is small. Hence, any government injection is not likely to lead to a much greater change in national income. This is why government injection is not effective in achieving actual economic growth in Singapore.

I think the analysis given to support why MPC would be small in Singapore and hence, why the multiplier would be small is valid. However, I find the last statement particularly dubious. Even if theoretically, the MPC = 0, k would still be 1, i.e. the autonomous injection by the government will be fully equal to the increase in the real national income. Wouldn't that still mean that an autonomous injection by the government would still be effective in growing the economy, i.e. increase the national output? Because whatever amount forked out by the government would go to increasing the real national income by the same amount and hence, a significant increase in AD would still take place.


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