Monetary Policy in Taiwan: The Implications of Liquidity

L Kelly; Jane Binner; Chang CL; YH TSENG

doi:10.1016/B978-0-12-800982-6.00012-3

Monetary Policy in Taiwan: The Implications of Liquidity

L Kelly, Jane Binner, Chang CL, YH TSENG

Finance

Research output: Chapter in Book/Report/Conference proceeding › Chapter

1 Citation (Scopus)

Abstract

This chapter aims to investigate the construction of monetary aggregates in Taiwan using a monthly data series from January 1, 1970 to December 2013 inclusive. Taiwan is a country of great economic interest in the post-recession era. Financial innovation in Taiwan has been vast, outpacing that in the USA and UK; moreover the money supply still plays a key role in monetary policy making in Taiwan. This is in contrast to the UK and USA where money's role has been downgraded to just one of many leading indicators of inflation. Our work uses a structural VAR approach to assess the performance of sophisticated Divisia indices in a small macroeconomic model. Future research will investigate the incorporation of risk aversion and utilize the prominent role money plays in Taiwanese policy to conduct counter-factual comparative studies of money-based vs. interest rate-based inflation targeting policy regimes.

Original language	English
Title of host publication	Handbook of Asian Finance
Subtitle of host publication	Financial Markets and Sovereign Wealth Funds
Publisher	Elsevier
Chapter	12
Pages	221-235
Number of pages	15
ISBN (Electronic)	9780128011010
ISBN (Print)	9780128009826
DOIs	https://doi.org/10.1016/B978-0-12-800982-6.00012-3
Publication status	Published - 6 Jun 2014

ASJC Scopus subject areas

General Economics,Econometrics and Finance
General Business,Management and Accounting

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Cite this

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AB - This chapter aims to investigate the construction of monetary aggregates in Taiwan using a monthly data series from January 1, 1970 to December 2013 inclusive. Taiwan is a country of great economic interest in the post-recession era. Financial innovation in Taiwan has been vast, outpacing that in the USA and UK; moreover the money supply still plays a key role in monetary policy making in Taiwan. This is in contrast to the UK and USA where money's role has been downgraded to just one of many leading indicators of inflation. Our work uses a structural VAR approach to assess the performance of sophisticated Divisia indices in a small macroeconomic model. Future research will investigate the incorporation of risk aversion and utilize the prominent role money plays in Taiwanese policy to conduct counter-factual comparative studies of money-based vs. interest rate-based inflation targeting policy regimes.

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Monetary Policy in Taiwan: The Implications of Liquidity

Abstract

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