A CGE model of 'Dutch disease' economics in Taiwan

A computable general equilibrium (CGE) model of Dutch disease economics in Taiwan's economy is established in order to examine the impacts of the imbalanced growth in output, endogenous learning effects from imports and exports and the import tariff reduction. Twenty-nine industry sectors and five quintiles of households are taken to measure the changes in industry structure and functional distribution of income. An imbalanced growth, either from output or exports, contributes to the reduction in the share of manufacturing industry, but the deterioration in the functional distribution of income only happens to an imbalanced growth in intersectoral output. A widespread trade liberalization policy helps to mitigate the Dutch disease phenomenon in the sense that de-industrialization and deterioration of the distribution of income by an imbalanced growth in manufacturing industry are not so severe.