Singapore: Selected Issues

International Monetary Fund

No 2013/327, IMF Staff Country Reports from International Monetary Fund

Abstract: This Selected Issues Paper discusses some observations on Singapore’s monetary policy framework. Singapore’s monetary policy uses the nominal effective exchange rate (NEER) as the instrument in a basket-band-crawl framework. The paper finds that under some conditions an exchange rate-based monetary policy may not be detrimental to external competitiveness. A key parameter is the weight of imports in the consumer basket or production function. Tightening monetary policy through a nominal appreciation helps to dampen imported cost pressures. In addition, nominal appreciation can reduce domestic sources of inflation by lowering demand for local factors of production.

Keywords: ISCR; CR; Singapore; monetary policy; reaction function; NEER; resident labor force; inflation differential; export-led growth model; productivity gain; monetary policy framework; Productivity; Inflation; Labor force; Real effective exchange rates; Wages; Global (search for similar items in EconPapers)
Pages: 11
Date: 2013-11-14
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Citations: View citations in EconPapers (3)

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