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Discuss whether exchange rate appreciation should remain the most…
Discuss whether exchange rate appreciation should remain the most important policy instrument in controlling rate of inflation in sg. [15]
KW
- discuss whether: give limitations and hw the polcy works + come to a conclusion
- erp appreciation: for policy questions, must have the three things 1. how policy works 2. limitations 3. ev
- sg: singapore context, we do not mention MP
- most important: how do we ev whether it is the most important? Look at whether it solves the root cause
For inflation, the policies that we can consider are
- FP
- MP
- ERP
- SSP
- Macroprudential policies
- Free trade policies
intro
- state the characteristics of sg
- whether ERP is the most important depends on the underlying causes of inflation
-
conclusion
erp is likely the most important for reducing inflation when it is due to external sources
- hence whether or not erp is the most effective depends on whether the inflation is external or internal
nevertheless, erp is stil extremely important to singapore given how reliant we are on trade
- of course, tho it is the most impt policy it is not the only policy
- we need to use policies mentioned in this essay to tackle internal causes
- we can also use other methods to tackle external causes of inflation such as diversfying our import and energy sources
-