Monetary management in Singapore : its formulation, implementation and impacts.

The proposed studies attempt to examine the formulation, implementation and the impacts of the exchange rate policy management by the Monetary Authority of Singapore (MAS). Singapore is a small and open economy with international trade is therefore highly susceptible to external disturbances. Our studies consider the short-term management of the exchange rate policy specifically through the use of United States dollar/ Singapore dollar swaps. The long-term effects of the policy are also being evaluated through an analysis of the flow of funds between Singapore and the international economy. The evolution of the unique dichotomized financial system is also being appraised in the context of capital mobility. Our empirical findings are not inconsistent with MAS guiding the exchange rate through smoothing the exchange rate variance, leaving by and large its value to be determined by market forces. Our analysis of domestic savings in Singapore revealed that the government's role in gross domestic savings is diminishing. Public sector savings, as a proportion of gross domestic savings, have declined between 1984 and 1995. Involuntary private sector savings, imposed by the government through the Central Provident Fund, has also relinquished its dominant position in total private savings. Instead, voluntary private savings, which include household and corporate savings, are commanding an increasing share of gross domestic savings. A large portion of the voluntary private savings was found to be in the form of private portfolio and property investments. In terms of the monetary transmission mechanism, the empirical results are as follows: (i) Money stock is endogenous with respect to the current and capital accounts flow of funds. This is consistent with the MAS claim that they do not target money growth or interest rates, (ii) The current account flow of funds and the exchange rate appears to have significant linkages. Current account flow of funds appears to Wiener-Granger cause the Real Effective Exchange Rate and the Nominal Effective Exchange Rate at high significance level.Master of Busines