Singapore: Selected Issues
This Selected Issues Paper discusses some observations on Singapore’s monetary policy framework. Singapore’s monetary policy uses the nominal effective exchange rate (NEER) as the instrument in a basket-band-crawl framework. The paper finds that under some conditions an exchange rate-based monetary policy may not be detrimental to external competitiveness. A key parameter is the weight of imports in the consumer basket or production function. Tightening monetary policy through a nominal appreciation helps to dampen imported cost pressures. In addition, nominal appreciation can reduce domestic sources of inflation by lowering demand for local factors of production.
Year of publication: |
2013-11-14
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Institutions: | International Monetary Fund (IMF) ; International Monetary Fund |
Subject: | Labor markets | Labor productivity | Education | Monetary policy | Real effective exchange rates | Selected issues | Singapore | inflation | monetary policy reaction function | monetary fund | real wages | price level | monetary policy decisions | monetary policy framework | monetary authority of singapore | monetary policy regime |
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