Monetary regime choice in Singapore: Would a Taylor rule outperform exchange-rate management?

The Impact of Monetary Regime on the Exchange Rate Pass-Through under Exchange Rate Volatility (Dynamic Panel Data Approach)

Sources of exchange rate fluctuations with Taylor rule fundamentals

a r t i c l e i n f o This paper investigates the sources of exchange rate fluctuations when monetary policy follows a Taylor rule interest rate reaction function. We first present a simple dynamic exchange rate model with Taylor rule fundamentals which is triangular in the long-run impacts of shocks to the output market, the interest rate differential, and the Taylor rule. We then proceed to a...

Informed Speculation and the Choice of Exchange Rate Regime

This paper explores the classic question regarding the costs and bene ̄ts of limiting exchange rate volatility starting from the premise that asset markets play an important role in aggregating information. I ̄nd that government trading, despite being completely observed, alters the ability of an asset market to reveal information. The main insight of the paper is that managing the exchange rate...

The Choice of Exchange-rate Regime and Speculative Attacks

We develop a framework for studying the choice of exchange rate regime in an open economy where the local currency is vulnerable to speculative attacks. The framework makes it possible to study, for the first time, the strategic interaction between the ex ante choice of regime and the likelihhod of ex post currency attacks. The optimal regime is determined by a policymaker who trades off the lo...

An Empirical Investigation into Exchange Rate Regime Choice and Exchange Rate Volatility

We test a simple model of exchange rate regime choice with data for 65 non-OECD countries covering the period 1980-94. We find that the variance of output at home and in potential target countries as well as the correlation between home and foreign real activity are powerful and robust predictors of exchange rate regime choice. Surprisingly, a more volatile foreign economy can be an argument in...