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Does an Overvalued Real Exchange Rate Create More Policy Uncertainty? Singaporean Case Using GARCH Model


  • Kodrat Wibowo

    () (Department of Economics, Padjadjaran University)


In this paper, I use GARCH model to explain the relationship between real exchange rate and its uncertainty using real exchange rate data of Singapore. The result supports no evidence that overvalued real exchange rate creates uncertainty of exchange rate policy in Singapore. This may give some ideas to country like Indonesia or Thailand to still maintain the peg system and not easily, just accept the idea of using currency board system (CBS) or other strategies in its exchange rate policy. Indonesia needs to learn how Singaporean economic strategy brings the country to higher levels of economic development while still maintaining peg system

Suggested Citation

  • Kodrat Wibowo, 2000. "Does an Overvalued Real Exchange Rate Create More Policy Uncertainty? Singaporean Case Using GARCH Model," Working Papers in Economics and Development Studies (WoPEDS) 200001, Department of Economics, Padjadjaran University, revised Oct 2000.
  • Handle: RePEc:unp:wpaper:200001

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    File Function: First version, 2000
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    References listed on IDEAS

    1. Velasco, Andres, 1997. "When are fixed exchange rates really fixed?," Journal of Development Economics, Elsevier, vol. 54(1), pages 5-25, October.
    2. Ball, Laurence, 1992. "Why does high inflation raise inflation uncertainty?," Journal of Monetary Economics, Elsevier, vol. 29(3), pages 371-388, June.
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    More about this item


    GARCH; exchange rate; policy uncertainty; Singapore;

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics


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