Singapore' Exchange Rate Regime: A Garch Approach (original) (raw)
Singapore is often cited for having successful exchange rate regimes. In fact it has been successful in maintaining low and stable rates of inflation and stability in its exchange rate. The basket, band and crawl features of the exchange rate system have served as an effective anchor of price stability, keeping inflation low and stable over the past 30 years. In addition, Singapore has complemented monetary policy with micron and macro-prudential measures to ensure overall price and financial stability in the economy. This study will demonstrate, through an econometric model in time series, if and how the Singapore exchange rate policy has changed in relation to the weight that four currency have within it. Specifically, utilizing Frankel's and Wei (2007) econometric model, we use a Garch approach because for most exchange rate time series, Garch model provide a sufficiently good fit.
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