MANAGED FLOAT EXCHANGE RATE SYSTEM: THE SINGAPORE EXPERIENCE

Hoe Ee Khor, Jason Lee, Edward Robinson and Saktiandi Supaat ()
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Jason Lee: Economic Policy Department, Monetary Authority of Singapore, 10 Shenton Way, MAS Building, Singapore 079117, Singapore
Edward Robinson: Economic Policy Department, Monetary Authority of Singapore, 10 Shenton Way, MAS Building, Singapore 079117, Singapore
Saktiandi Supaat: Economic Policy Department, Monetary Authority of Singapore, 10 Shenton Way, MAS Building, Singapore 079117, Singapore

The Singapore Economic Review (SER), 2007, vol. 52, issue 01, 7-25

Abstract: This paper examines the key characteristics of Singapore's exchange rate-centered monetary policy; in particular, its managed float regime which incorporates key features of the basket, band and crawl system popularized by Williamson (1998, 1999). We assess how the flexibility accorded by this framework has been advantageous in facilitating adjustment to various shocks to the economy. A characterization of the countercyclical nature of Singapore's exchange rate policy is also offered, with reference to recent work on the monetary policy reaction function and estimates of Singapore's behavioral equilibrium exchange rate. We also review previous econometric analysis which provides evidence that Singapore's managed float system may have helped to mitigate the spillover effects of such increased volatility into the real economy. The track record of Singapore's managed float regime over the past two decades suggests that intermediate regimes are a viable alternative to the so-called "corner solutions", especially when supported by consistent macroeconomic and microeconomic policies as well as strong institutions.

Keywords: Exchange rates; inflation; volatility; monetary policy rules; Singapore (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (9)

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DOI: 10.1142/S0217590807002531

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