Monetary regime choice in Singapore: Would a Taylor rule outperform exchange-rate management?

Hwee Kwan Chow, Guay Lim and Paul McNelis ()

Journal of Asian Economics, 2014, vol. 30, issue C, 63-81

Abstract: A DSGE–VAR approach was adopted to examine the managed exchange-rate system at work in Singapore and to ask if the country had any reason to fear floating the exchange rate and adopting a Taylor rule. The results showed that, in terms of overall inflation volatility, the exchange rate rule had a comparative advantage over the Taylor rule when export-price shocks were the major sources of real volatility while a Taylor rule was preferable when domestic productivity shocks were dominant. The exchange-rate rule also dominated the Taylor rule for reducing inflation persistence.

Keywords: Inflation targeting; Taylor rule; Exchange-rate management; DSGE–VAR estimation (search for similar items in EconPapers)
JEL-codes: E52 E62 F41 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:30:y:2014:i:c:p:63-81

DOI: 10.1016/j.asieco.2013.09.001

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