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A Consistent Estimate For The Impact Of Singapore'S Exchange Rate On Competitiveness

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  • JANG PING THIA

    (Ministry of Trade and Industry of Singapore, 100 High Street #11-01, The Treasury, Singapore 179434, Singapore)

Abstract

Services form a larger part of the Singapore economy. However, it is difficult to analyze the exchange rate impact on services due to the lack of price data. Regression of output or export on exchange rate, while highly intuitive, is likely to suffer from the endogeneity problem since Singapore's exchange rate is used as a counter-cyclical policy tool. This results in inconsistent estimates. I propose a novel approach to overcome these limitations by using Hong Kong as a control for Singapore's economy to implement a pseudo "difference-in-difference" method, exploiting time variation in output, to achieve consistent estimates.

Suggested Citation

  • Jang Ping Thia, 2010. "A Consistent Estimate For The Impact Of Singapore'S Exchange Rate On Competitiveness," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 55(02), pages 321-334.
    • Handle: RePEc:wsi:serxxx:v:55:y:2010:i:02:n:s0217590810003742
    DOI: 10.1142/S0217590810003742
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    References listed on IDEAS

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    1. THORBECKE, Willem, 2009. "Can East Asia be an Engine of Growth for the World Economy?," Discussion papers 09006, Research Institute of Economy, Trade and Industry (RIETI).
    2. John Williamson, 2001. "The Case for a Basket, Band and Crawl (BBC) Regime for East Asia," RBA Annual Conference Volume (Discontinued), in: David Gruen & John Simon (ed.),Future Directions for Monetary Policies in East Asia, Reserve Bank of Australia.
    3. Alwyn Young, 1992. "A Tale of Two Cities: Factor Accumulation and Technical Change in Hong Kong and Singapore," NBER Chapters, in: NBER Macroeconomics Annual 1992, Volume 7, pages 13-64, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Exchange rate; exports; endogeneity; E52; E41; C20;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General

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