publication . Article . 2010

A Consistent Estimate For The Impact Of Singapore'S Exchange Rate On Competitiveness

Open Access
  • Published: 01 Jan 2010 Journal: The Singapore Economic Review, volume 55, issue 2, pages 321-334
<jats:p> Services form a larger part of the Singapore economy. However, it is difficult to analyze the exchange rate impact on services due to the lack of price data. Regression of output or export on exchange rate, while highly intuitive, is likely to suffer from the endogeneity problem since Singapore's exchange rate is used as a counter-cyclical policy tool. This results in inconsistent estimates. I propose a novel approach to overcome these limitations by using Hong Kong as a control for Singapore's economy to implement a pseudo "difference-in-difference" method, exploiting time variation in output, to achieve consistent estimates. </jats:p>
free text keywords: Exchange rate, exports, endogeneity, E52, E41, C20, Economics and Econometrics, Exchange rate, Regression, International trade, business.industry, business, Economics, Endogeneity
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