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ESTIMATED DYNAMIC STOCHASTIC GENERAL EQUILIBRIUM MODEL OF THE TAIWANESE ECONOMY
Author(s) -
Teo Wing Leong
Publication year - 2009
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2009.00447.x
Subject(s) - economics , dynamic stochastic general equilibrium , business cycle , monetary policy , small open economy , general equilibrium theory , investment (military) , open economy , macroeconomics , economy , money supply , monetary economics , exchange rate , politics , political science , law
. I develop a small open economy dynamic stochastic general equilibrium model to study monetary policy and the business cycle in Taiwan. Several versions of the model with different representations of Taiwanese monetary policy are estimated using Bayesian techniques. The major findings are that: (i) monetary policy in Taiwan is best described by a money supply growth rate rule; (ii) the Taiwanese economy is more flexible than the Euro area economy; and (iii) export price mark‐up and investment‐specific technology shocks are the main driving forces of output growth fluctuations in Taiwan.