Monetary Policy Regimes and Macroeconomic Outcomes: Hong Kong and Singapore

Gerlach, Stefan; Gerlach-Kristen, Petra

doi:10.2139/ssrn.900073

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Monetary Policy Regimes and Macroeconomic Outcomes: Hong Kong and Singapore

BIS Working Paper No. 204

34 Pages Posted: 20 Sep 2007

See all articles by Stefan Gerlach

Stefan Gerlach

Central Bank of Ireland; Centre for Economic Policy Research (CEPR)

Petra Gerlach-Kristen

Swiss National Bank

Date Written: April 2006

Abstract

This paper studies the relationship between macroeconomic behaviour and the monetary policy regime in Hong Kong and Singapore, using data for 1984-2004. We estimate an econometric model, comprising a Phillips curve, an IS curve and an equation for changes in the nominal effective exchange rate (NEER), which, in the case of Singapore, can be interpreted as a policy reaction function. The parameter estimates differ in two regards: the NEER responds to inflation in Singapore but not in Hong Kong, and the autoregressive parameter for the output gap in Singapore is smaller than in Hong Kong. Overall, the variability of inflation has been lower in Singapore, but the volatility of real economic activity has been similar in the two economies.

Keywords: Hong Kong, Singapore, monetary policy, inflation

JEL Classification: E31, E32, E58

Suggested Citation: Suggested Citation

Gerlach, Stefan and Gerlach-Kristen, Petra, Monetary Policy Regimes and Macroeconomic Outcomes: Hong Kong and Singapore (April 2006). BIS Working Paper No. 204, Available at SSRN: https://ssrn.com/abstract=900073 or http://dx.doi.org/10.2139/ssrn.900073