Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/299454 
Authors: 
Year of Publication: 
2023
Series/Report no.: 
IDB Working Paper Series No. IDB-WP-1482
Publisher: 
Inter-American Development Bank (IDB), Washington, DC
Abstract: 
This paper introduces a novel monetary policy framework where the exchange rate becomes the central instrument. Using Singapore as a case study, it explores the Monetary Authority's adoption of the exchange rate as the primary tool since 1981, diverging from conventional approaches centered on interest rates or monetary aggregates. The estimated exchange rate reaction function aligns well with actual deviations, supporting the hypothesis that Singapore's forward-looking policy rule effectively responds to inflation and output volatility, especially during economic crises. This framework offers a promising alternative for countries with open economies and challenges in implementing traditional interest rate instruments.
Subjects: 
exchange rate
inflation
monetary policy rules
Singapore
JEL: 
E31
E52
E58
F41
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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