Abstract
Based on a small, open-economy IS-LM prototype model, this paper examines the sources of macroeconomic instabilities in Hong Kong and Singapore operating under two different currency board arrangements. The empirical findings suggest that in general, both external and internal factors contribute to the macroeconomic volatilities observed in the two economies. There is evidence of a tradeoff between exchange rate and interest rate targeting for the stability of money supply in Singapore. Our findings have important implications for Mainland China's monetary authorities in the transition from a hard-peg exchange rate regime like Hong Kong to a basket-link system like the one in Singapore.
Original language | English |
---|---|
Pages (from-to) | 93-116 |
Number of pages | 24 |
Journal | Singapore Economic Review |
Volume | 52 |
Issue number | 1 |
DOIs | |
Publication status | Published - Apr 2007 |
Scopus Subject Areas
- Economics and Econometrics
User-Defined Keywords
- Basket-link
- Currency board
- Hong Kong
- Singapore