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

Chow, Hwee Kwan; Lim, G. C.; McNelis, Paul D.

doi:10.1016/j.asieco.2013.09.001

Cited by 22 publications

(13 citation statements)

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“…low degree of financial market integration across countries within the SAARC region. In the wake of financial sector liberalisation, Chow, et al (2014) acknowledged the role of foreign interest rates in domestic monetary policy setting. They argued that under free capital mobility domestic interest rates are determined by foreign interest rates.…”

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confidence: 99%

“…Since, SAARC countries are heavily dependent on international trade and domestic consumption has high import content and these economies are susceptible to imported inflation. It appears from the literature that in the process of inflation targeting, management of exchange rate play fundamental role in monetary policy framework, therefore its role cannot be ignored [Chow, et al (2014)]. The Central Banks may also respond to real exchange rate movements because exchange rate shocks affect their ability in achieving inflation target.…”

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confidence: 99%

“…Minimising exchange rate volatility enhances credibility of the Central Banks and affects inflationary expectations [Chami, et al (2007)]. Shrestha and Semmler (2015) and Chow, et al (2014) noted that emerging market economies seem to suffer from fear of floating in case of exchange rate appreciation and fear of loss in case of decline in foreign exchange reserves due to lack of credibility of the monetary authority. Therefore, emerging market countries have adopting a Taylor rule.…”

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confidence: 99%

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Conducting Monetary Policy in South Asian Economies: An Investigation

Khan¹,

Ahmed²

2022

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Monetary policy which until recently aimed at targeting monetary aggregates has quietly given way to adjusting interest rates. Most of the Central Banks now focus on money reaction function that directly targets inflation or price level. This paper examines the way monetary policy is being conducted in the four major South Asian economies, namely, Bangladesh, India, Pakistan and Sri Lanka. The analysis is based on a variant of the Taylor rule framework. Using quarterly data over the period 1990Q1 to 2012Q4, the study finds that the monetary authorities in India, Pakistan and Sri Lanka have accommodated some degree of inflationary pressure, whereas Bangladesh has continuously smoothened interest rate while setting its monetary policy. Besides pursuing a mild monetary policy stance against inflation, India, Pakistan and Sri Lanka are also giving importance to foreign interest rate and real exchange rate movements to justify their relevance in monetary policy setting. However, the same has not been found to be true for Bangladesh. JEL Classification: E52, E58, E60 Keywords: Monetary Policy Rule, Central Banks, SAARC Countries

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Conducting Monetary Policy in South Asian Economies: An Investigation

Khan¹,

Ahmed²

2022

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“…In order to unpack the shocks hitting the system and their effects on the economy, time series models should be identified with extra assumptions. Within this context, DSGE models derived from economic theory can be used to define all the linkages between variables (Liu & Theodoridis, 2010) as is evident from a growing literature in DSGE-VAR models (Chow, Lim, & McNelis, 2014;Chow & McNelis, 2010;Del Negro & Schorfheide, 2004;Franchi & Paruolo, 2012;Ghent, 2009;Lees, Matheson, & Smith, 2007;Liu, Gupta, & Schaling, 2008;Liu & Theodoridis, 2010;Morris, 2012;Watanabe, 2009). …”

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Possible effects of domestic and foreign factors on monetary policy implementation in Turkey: a DSGE-VAR approach

Özçelebi

Yildirim

Kansu

2014

Economic Research-Ekonomska Istraživanja

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In this paper, we attempt to explore the possible effects of technology, foreign output, price and terms of trade shocks on short-term interest rates in Turkey within a dynamic stochastic general equilibrium-vector autoregressive (DSGE-VAR) framework. In a sense, the primary aim of our paper is to analyse whether the Central Bank of the Republic of Turkey (CBRT) should consider the role of technology, foreign output, price and terms of trade shocks in its monetary policy implementation. Empirical results reveal that the above-mentioned factors have importance for the CBRT, which intends to control economy-wide interest rates in order to maintain price stability.

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“…The same holds true for the currency board system of Hong Kong, which has been established as early as 1983 and, since, has been in place (see, for example, Ho, 2002;Cook and Yetman, 2014, as well as Table 13 in the Appendix). In contrast, the Monetary Authority of Singapore (MAS) operates an exchange rate based monetary policy and, hence, the FX rate is practically the instrument to steer both output and inflation (see, for example, Siregar, Har, et al, 2001;Devereux, 2003;Chow, 2007;Chow, Lim, and McNelis, 2014, as well as Table 15 in the Appendix). As a consequence there does not exist a free floating USD/SGD exchange rate, but a managed regime which occasionally results in the more volatile exchange rate vis-à-vis the US dollar in comparison to the Hong Kong dollar (Devereux, 2003).…”

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Predicting Exchange Rates in Asia: New Insights on the Accuracy of Survey Forecasts

Kunze

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractThis paper evaluates aggregated survey forecasts with forecast horizons of 3, 12, and 24 months for the exchange rates of the Chinese yuan, the Hong Kong dollar, the Japanese yen, and the Singapore dollar vis-à-vis the US dollar using common forecast accuracy measures. Additionally, the rationality of the exchange rate predictions are assessed utilizing tests for unbiasedness and efficiency. All investigated forecasts are irrational in the sense that the predictions are biased. However, these results are inconsistent with an alternative measure of rationality based on methods of applied time series analysis. Investigating the order of integration of the time series and using cointegration analysis, empirical evidence supports the conclusion that the majority of forecasts are rational. Regarding forerunning properties of the predictions, the results are less convincing, with shorter term forecasts for the tightly managed USD/CNY FX regime being one exception. As one important evaluation result, it can be concluded, that the currency regime matters for the quality of exchange rate forecasts.JEL classification: F31, F37, G17, O24.

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

Cited by 22 publications

References 14 publications

Conducting Monetary Policy in South Asian Economies: An Investigation

Conducting Monetary Policy in South Asian Economies: An Investigation

Possible effects of domestic and foreign factors on monetary policy implementation in Turkey: a DSGE-VAR approach

Predicting Exchange Rates in Asia: New Insights on the Accuracy of Survey Forecasts

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