March 28, 2017

Singapore’s strong and well-conceived economic policies have kept it safe from the wrath of unbridled international capital flows in the past few decades. In Capital Flows and Exchange Rate Volatility: Singapore’s Experience (published by University of Chicago Press for National Bureau of Economic Research, 2007) Prof Basant Kapur (Department of Economics) first discusses the 1998 experience of Hong Kong, another city-state with a well-developed banking system and equities market, operating on a Currency Board system just like Singapore although with some differences. Prof Kapur identifies some vulnerable areas in Hong Kong’s set-up and discusses Singapore’s policy background and early experiences. In light of Hong Kong’s experience Prof Kapur highlights how Singapore’s policy framework served to circumvent or minimise important vulnerabilities. Particular attention is paid to Singapore’s exchange-rate policy and its policy of non-internationalisation of the Singapore dollar along with equity-market and currency-market interactions. Prof Kapur also examines how Singapore emerged relatively unscathed from the 1997 Asian Crisis.

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