The Study of Real Exchange Rate Fluctuation - The Case of Taiwan
¡@¡@Taiwan lacks of natural resources and highly industrialized at the same time. International trade activities are the most crucial way to obtain raw materials for production and channels to sell Taiwan¡¦s output to the rest of the world. Therefore, the fluctuation of real exchange rate influences exports and imports just as double blades sword, and subtly causes welfare issue. In this paper, we combine traditional productivity argument proposed by Balassa-Samuelson and recent literatures focusing on sticky price both to cause real exchange rate in the long-run using Taiwan as a case. Using structural VAR model to decompose unobservable shocks, change in productivity between domestic economy and the trading blocs is still the most influencing factor to explain the fluctuation of real exchange rate of Taiwan.
Advisor:Ming-Jang Weng; Yung-Hsiang Ying; Jia-Hei Weng
School:National Sun Yat-Sen University
School Location:China - Taiwan
Source Type:Master's Thesis
Keywords:structural var taiwan real exchange rate
Date of Publication:07/19/2005