The Interplay of Wage and Exchange Rate Policies in Singapore: A Case of Collective Bargaining in Macroeconomic Management
AbstractThis article analyzes an optimization model of the policy game between Singapore's National Wage Council and the Monetary Authority of Singapore and further simulates the model over policy rules (Nash game versus non-Nash game), economic scenarios, and the game players' preference and bargaining power. The results indicate that the exchange rate appreciation and wage growth act as substitutes under the Nash rule of policy responses, whereas they act as complements under the non-Nash rule. Under the Nash rule, the exchange rate appreciation tends to be procyclical and wage growth countercyclical; union workers' bargaining power relative to employers' strengthens the procyclical appreciation uniformly but reinforces the countercyclical wage growth only when the economy undergoes a downturn. Both the Nash and non-Nash rules call for more moderate appreciation and more flexible wage adjustments than their actual movements. (JEL "E64", "E61", "F41") Copyright 2004 Western Economic Association International.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Contemporary Economic Policy.
Volume (Year): 22 (2004)
Issue (Month): 1 (01)
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Find related papers by JEL classification:
- E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
- E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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