Price and Wage Flexibility and Economic Development in Taiwan
- At the Kuomintang Ruling Period and After the First Year of Democratization -
2023 Volume 20 Issue 2 Pages 23-38
Details
2023 Volume 20 Issue 2 Pages 23-38
The purpose of this paper is to analyze the causes of price and output fluctuations in Taiwan. We apply a structural VAR model to analyze changes in Taiwan’s real GDP and GDP deflator since 1961. Our results show that the time needed for effects of impulse response to be zero becomes longer after the First Year of Democratization than that of the Kuomintang Ruling Period. This could be interpreted that since the tertiary industry has become main industry in Taiwan, the time taken for price changes to reach equilibrium is getting longer.
