Exchange Rate Targeting as a Monetary Policy Alternative to Interest Rate Targeting

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Abstract/Contents

Abstract: This paper examines the use of exchange rates as an instrument in attaining monetary policy objectives, as has been practiced in Singapore since 1981. Our basis for comparison is interest rate targeting. We present a model of the economy and examine the performance of “Taylor rule”-styled interest rate and exchange rate rules in stabilizing macroeconomic variables. We conclude that exchange rate targeting does confer considerable benefits to a small open economy that is highly dependent on trade, but these advantages diminish or disappear entirely for a less trade-dependent economy.

Type of resource	text
Date created	May 2008

Author	Tan, Shin Eik
Primary advisor	Taylor, John B.
Degree granting institution	Stanford University, Department of Economics

Subject	Stanford Department of Economics
Subject	exchange rates
Subject	monetary policy
Subject	Taylor rule
Genre	Thesis

Location	https://purl.stanford.edu/gs545wv1838

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Preferred Citation: Tan, Shin Eik. (2008). Exchange Rate Targeting as a Monetary Policy Alternative to Interest Rate Targeting. Stanford Digital Repository. Available at: https://purl.stanford.edu/gs545wv1838

Stanford University, Department of Economics, Honors Theses

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