Exchange Rate Pass-Through to Inflation in Singapore: Singapore

August 13, 2024

Preview Citation

Format: Chicago

Kodjovi M. Eklou Exchange Rate Pass-Through to Inflation in Singapore: Singapore, (USA: International Monetary Fund, 2024) accessed November 12, 2024

Summary

Singapore has addressed high inflation over the past years amid a tight labor market through several rounds of tightening of the exchange rate-based monetary policy. This paper estimates the exchange pass-through to inflation in Singapore with a particular focus on the role of labor market conditions. The paper first finds a strong exchange rate pass-through to inflation in Singapore, after accounting for the potential endogeneity of changes in the exchange rate. Further, it uncovers that labor market tightness dampens exchange rate pass-through and therefore could weaken monetary policy transmission. Overall, the results suggest that monetary policy should be more vigilant under a tight labor market condition. The paper then draws policy implications for taming inflation under tight labor market conditions.

Subject: Consumer price indexes, Exchange rate pass-through, Exchange rates, Foreign exchange, Inflation, Labor, Labor markets, Prices

Keywords: $NEER appreciation shock, Consumer price indexes, Exchange rate pass-through, Exchange rate pass-through to inflation, Exchange rates, Global, Inflation, Inflation development, Labor market conditions, Labor market tightness, Labor markets, Monetary Policy, Pass-through to inflation, Services inflation

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Selected Issues Paper No. 2024/039
Stock No:

SIPEA2024039
ISBN:

9798400283796
ISSN:

2958-7875

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