Publication Type
Journal Article
Version
acceptedVersion
Publication Date
2-2014
Abstract
This paper adopts a dynamic stochastic general equilibrium-vector autorgressive (DSGE-VAR) approach to examine the managed exchange-rate system at work in Singapore. We examine if the country has any reason to fear floating the exchange rate and adopting a Taylor rule. Our results show that, in terms of overall inflation volatility, the exchange rate rule has a comparative advantage over the Taylor rule when export price shocks are the major sources of real volatility, while a Taylor rule dominates when domestic productivity shocks drive real volatility. The exchange-rate rule also dominates the Taylor rule for reducing inflation persistence.
Keywords
Inflation targeting, Taylor rule, Exchange-rate management, DSGE-VAR estimation
Discipline
Asian Studies | Finance
Research Areas
Macroeconomics
Publication
Journal of Asian Economics
Volume
30
First Page
63
Last Page
81
ISSN
1049-0078
Identifier
10.1016/j.asieco.2013.09.001
Publisher
Elsevier
Citation
CHOW, Hwee Kwan; LIM, G. C.; and McNelis, Paul D..
Monetary regime choice in Singapore: Would a Taylor rule outperform exchange-rate management?. (2014). Journal of Asian Economics. 30, 63-81.
Available at: https://ink.library.smu.edu.sg/soe_research/1524
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.asieco.2013.09.001