Aspects of macroeconomic policy with reference to the Republic of China in Taiwan
Aspects of macroeconomic policy with reference to the Republic of China in Taiwan
The objectives of this dissertation are threefold. The first is to examine theoretically the sustainability of a monetary policy coordination between Taiwan and the United States in the light of the trade imbalance that has existed between them since the early 1980s. Secondly, in view of the persistent trade surplus, we empirically determine whether the savings behaviour of the Taiwanese is precautionary, and if so, in which aspects, so as to propose a policy which might reduce the savings and decrease the persistent trade surplus. Thirdly, in view of accumulating government debt and potential inflation, we theoretically investigate the role of an independent central banker when fiscal discipline and the likelihood of a successful public debt stabilisation programme are taken into consideration.
As regards the first point, we conclude that, in the Miller-Salmon (1985b) two-country model with different country sizes initiated with asymmetrical disturbance, a cooperative monetary policy may be sustainable when both governments precommit themselves and ignore their perceived ability to exert an influence on real exchange rates. On the second point, following Skinner's (1988) approach, we show that the household savings of Taiwan are determined by significant earnings uncertainty. Furthermore, on the basis of Hubbard, Skinner and Zeldes (1993), and the analysis of housing data in Taiwan, we find that sources of uncertainty as regards `cash on hand' include uncertainty over opportunity costs for housing, earnings uncertainty concerning standards of education, and uncertainty over expenses for medical care. Thus, we predict that an improvement in social security may well decrease the uncertainty regarding cash on hand, and may reduce the precautionary savings of the Taiwanese and hence the persistent trade surplus.
University of Southampton
1994
Su, Dou-Ming
(1994)
Aspects of macroeconomic policy with reference to the Republic of China in Taiwan.
University of Southampton, Doctoral Thesis.
Record type:
Thesis
(Doctoral)
Abstract
The objectives of this dissertation are threefold. The first is to examine theoretically the sustainability of a monetary policy coordination between Taiwan and the United States in the light of the trade imbalance that has existed between them since the early 1980s. Secondly, in view of the persistent trade surplus, we empirically determine whether the savings behaviour of the Taiwanese is precautionary, and if so, in which aspects, so as to propose a policy which might reduce the savings and decrease the persistent trade surplus. Thirdly, in view of accumulating government debt and potential inflation, we theoretically investigate the role of an independent central banker when fiscal discipline and the likelihood of a successful public debt stabilisation programme are taken into consideration.
As regards the first point, we conclude that, in the Miller-Salmon (1985b) two-country model with different country sizes initiated with asymmetrical disturbance, a cooperative monetary policy may be sustainable when both governments precommit themselves and ignore their perceived ability to exert an influence on real exchange rates. On the second point, following Skinner's (1988) approach, we show that the household savings of Taiwan are determined by significant earnings uncertainty. Furthermore, on the basis of Hubbard, Skinner and Zeldes (1993), and the analysis of housing data in Taiwan, we find that sources of uncertainty as regards `cash on hand' include uncertainty over opportunity costs for housing, earnings uncertainty concerning standards of education, and uncertainty over expenses for medical care. Thus, we predict that an improvement in social security may well decrease the uncertainty regarding cash on hand, and may reduce the precautionary savings of the Taiwanese and hence the persistent trade surplus.
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Published date: 1994
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Local EPrints ID: 458363
URI: http://eprints.soton.ac.uk/id/eprint/458363
PURE UUID: ab5fa111-d0fc-4ef5-aadf-b0c2f52a74ca
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Date deposited: 04 Jul 2022 16:47
Last modified: 04 Jul 2022 16:47
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Author:
Dou-Ming Su
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