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|Title: ||Money Demand, Sterilization, and the Adjustment of Balance of Payments: An Empirical Study of Taiwan|
Hwang, Jen Te
|Issue Date: ||2016-10-17 15:15:22 (UTC+8)|
Due to the rapid expansion of exports relative to imports. Taiwan has enjoyed a persistent trade surpluses for a long time. In this paper, we attempt to find out why Taiwan could enjoy persistent trade surpluses for such prolonged period of time. The analysis will be based on the monetary side. The empirical results show that the higher income elasticity of demand for money and sterilization of most increased foreign assets in the period of trade surpluses are two possible reasons to break the automatic adjustment mechanism of Taiwan's trade imbalance. The VAR analysis is used further to test the sterilization of the balance of payments, it shows that change in Taiwan's foreign assets Granger-causes change in Taiwan's domestic assets. There exists a high correlation between innovations of change in Taiwan's foreign assets and change in Taiwan's domestic assets. Both impulse response analysis and variance decomposition analysis indicate that the sterilization policies adopted by Taiwan's monetary authorities are major means to offset the change in foreign assets.
|Relation: ||國立政治大學學報, 65,409-435|
|Data Type: ||article|
|Appears in Collections:||[Issue 65] Journal Articles|
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