A structural decomposition of business cycles in Taiwan |
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| Institution: | 1. Department of Economics, Ming Chuan University, Taoyuan, Taiwan;2. Department of Economics, Old Dominion University, Norfolk, VA 23529, USA;3. Institute of Interdisciplinary Studies, National Sun Yat-Sen University, Kaohsiung 80424, Taiwan;1. Business School, Sichuan University, Chengdu 610064, PR China;2. Institute of New Energy and Low-Carbon Technology, Sichuan University, Chengdu 610064, PR China;1. National Taiwan Normal University, Taiwan;2. Ming Chuan University, Taiwan;1. School of Metallurgical and Ecological Engineering, University of Science and Technology Beijing, Beijing 100083, China;2. Handan Steel Co. Ltd, Handan 056000, China;3. State Key Laboratory of Advanced Metallurgy, University of Science and Technology Beijing, Beijing 100083, China |
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| Abstract: | The purpose of this paper is to examine the influence of foreign and domestic factors on the business cycle of Taiwan. Using a structural vector-autoregressive model of a small open economy (OE), we examine how the influences of these factors differ as a result of trade flows and liberalization efforts. The results suggest that Taiwanese output has remained quite immune to global shocks in spite of the financial liberalization of the 1980s. Furthermore, as Asia has become Taiwan's major trading partner, so too has Asia become the major foreign influence on Taiwan's business cycle. Indeed, in many ways Taiwan appears to have gained resilience from foreign shocks, rather than forfeited domestic stability. |
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