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The Interplay of Wage and Exchange Rate Policies in Singapore: A Case of Collective Bargaining in Macroeconomic Management

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  • Ying Wu
  • Kuang Hui Goh
  • Boon Keng Lee

Abstract

This article analyzes an optimization model of the policy game between Singapore's National Wage Council and the Monetary Authority of Singapore and further simulates the model over policy rules (Nash game versus non‐Nash game), economic scenarios, and the game players' preference and bargaining power. The results indicate that the exchange rate appreciation and wage growth act as substitutes under the Nash rule of policy responses, whereas they act as complements under the non‐Nash rule. Under the Nash rule, the exchange rate appreciation tends to be procyclical and wage growth countercyclical; union workers' bargaining power relative to employers' strengthens the procyclical appreciation uniformly but reinforces the countercyclical wage growth only when the economy undergoes a downturn. Both the Nash and non‐Nash rules call for more moderate appreciation and more flexible wage adjustments than their actual movements. (JEL E64, E61, F41)

Suggested Citation

  • Ying Wu & Kuang Hui Goh & Boon Keng Lee, 2004. "The Interplay of Wage and Exchange Rate Policies in Singapore: A Case of Collective Bargaining in Macroeconomic Management," Contemporary Economic Policy, Western Economic Association International, vol. 22(1), pages 39-49, January.
    • Handle: RePEc:bla:coecpo:v:22:y:2004:i:1:p:39-49
    DOI: 10.1093/cep/byh004
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    References listed on IDEAS

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    1. Chang-Tai Hsieh, 2002. "What Explains the Industrial Revolution in East Asia? Evidence From the Factor Markets," American Economic Review, American Economic Association, vol. 92(3), pages 502-526, June.
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    1. repec:ksp:journ3:v:1:y:2015:i:4:p:275-280 is not listed on IDEAS
    2. Vida VARAHRAMI, 2015. "Determination of Wages and Exchange Rate with Game Theory," Journal of Economic and Social Thought, KSP Journals, vol. 2(4), pages 275-280, December.

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    More about this item

    JEL classification:

    • E64 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Incomes Policy; Price Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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