A comparative study of exchange rate regimes and macro-instabilities in the twin economies of Singapore and Hong Kong

Yue MA, Y. Y. KUEH, C. W., Raymond NG

Research output: Journal PublicationsJournal Article (refereed)peer-review

4 Citations (Scopus)


Based on a small, open-economy IS-LM prototype model, this paper examines the sources of macroeconomic instabilities in Hong Kong and Singapore operating under two different currency board arrangements. The empirical findings suggest that in general, both external and internal factors contribute to the macroeconomic volatilities observed in the two economies. There is evidence of a tradeoff between exchange rate and interest rate targeting for the stability of money supply in Singapore. Our findings have important implications for Mainland China's monetary authorities in the transition from a hard-peg exchange rate regime like Hong Kong to a basket-link system like the one in Singapore.
Original languageEnglish
Pages (from-to)93-116
Number of pages24
JournalSingapore Economic Review
Issue number1
Publication statusPublished - 1 Apr 2007


  • Basket-link
  • Currency board
  • Hong Kong
  • Singapore

Cite this