The Vanishing Intermediate Regime and the Tale of Two Cities: Hong Kong versus Singapore

CIES Working Paper No. 0031

42 Pages Posted: 8 Apr 2001  

Ramkishen S. Rajan

ESSEC Business School

Reza Siregar

University of Adelaide

Date Written: July 2000

Abstract

Following the East Asian crisis, some prominent economists have advocated that small and open economies in Asia adopt an irrevocably fixed regime. Such a hard peg, it is argued, signals greater commitment to rule out arbitrary exchange rate adjustments as well as the authorities (IM) willingness to subordinate domestic policy objectives such as output and employment growth to the maintenance of the pegged exchange rate. But is this a reasonable position to adopt? In order to answer this question, we consider and contrast the experiences of Hong Kong and Singapore. While both of these economies share a number of similarities, the former operates a US dollar-linked currency board regime and the latter maintains an adjustable peg in the form of a monitoring band arrangement with the central parity based on a trade-weighted currency basket.

JEL Classification: F30

Suggested Citation

Rajan, Ramkishen S. and Siregar, Reza, The Vanishing Intermediate Regime and the Tale of Two Cities: Hong Kong versus Singapore (July 2000). CIES Working Paper No. 0031. Available at SSRN: https://ssrn.com/abstract=237202 or http://dx.doi.org/10.2139/ssrn.237202

Ramkishen S. Rajan (Contact Author)

ESSEC Business School ( email )

5 Nepal Park
Singapore, 139408
Singapore

HOME PAGE: http://https://sites.google.com/site/ramkishenrajan/

Reza Siregar

University of Adelaide ( email )

Room 128, Napier Bldg.
Adelaide SA 5005
Australia
(+61 8) 8303 4928 (Phone)
(+61 8) 8223 1460 (Fax)

HOME PAGE: http://www.economics.adelaide.edu.au/staff/siregar/

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