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The credit channel and optimal monetary policy: the case of Taiwan
Ho, Pei Ying
Hwang, Yu Ning
Ho, Pei Ying
|Issue Date:||2011-10-11 17:02:43 (UTC+8)|
The objective of this paper is to investigate the optimal monetary policy of Taiwan by using a micro-based dynamic stochastic general equilibrium (DSGE) model with the banking sector. The results of steady state show that how the banking sector affects the Taiwanese economy. Furthermore, comparing the performance of alternative monetary policies, the monetary aggregate growth rate rule leads to the highest welfare and lowest volatility of output, inflation rates and exchange rate. It may be the optimal monetary policy of Taiwan. Also, with high degree of capital market friction and highly open market, the rank of these rules is the same.
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