Exchange-Rate Systems and Interest-Rate Behaviour: The Experience of Hong Kong and Singapore

Y. K. Tse () and S. L. Yip
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S. L. Yip: Division of Economics,School of Humanities and Social Sciences, Nanyang Technological University, Singapore

No 503, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: The Currency Board System in Hong Kong and the monitoring band system in Singapore are important benchmarks for two different exchange-rate systems. In this paper we consider the implications of the two exchange-rate systems on the interest-rate behaviour of the two economies. We examine the domestic-US interest differentials under the two exchange-rate regimes during the Asian Financial Crisis as well as the pre- and post-crisis periods. Using a bivariate generalized autoregressive conditional heteroscedasticity model, we also investigate whether there is any change in the correlation between the domestic and US interest rates due to the Asian Financial Crisis.

JEL-codes: E42 E58 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2005-03
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http://www3.ntu.edu.sg/hss2/egc/wp/2005/2005-03.pdf (application/pdf)

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Journal Article: Exchange-rate systems and interest-rate behaviour: The experience of Hong Kong and Singapore (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:0503

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