Singapore's Collective Bargaining in a Game of Wage and Exchange Rate Policies

Ying Wu

Open Economies Review, 2004, vol. 15, issue 3, 273-289

Abstract: In Singapore's system of tripartite collective bargaining, does the wage-policy maker consistently react optimally to the best move made by the exchange rate-policy maker (Nash-rule) or only to the state of economy (non-Nash rule)? This paper finds that the Nash-rule equilibrium is unstable and thus the non-Nash rule becomes more meaningful. Under the non-Nash rule, the simulated wage growth exhibits a counter-cyclical pattern and increases with the union of workers' bargaining power. The government's role appears to strike a balance between the interests of the employers' and the employees. Consistent with actual observations, the simulated exchange-rate appreciation has acted as a complement to wage growth from 1987 to 1995.

Date: 2004
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