The Impacts of US Quantitative Easing Policy on Taiwan Economy
Date Issued
2014
Date
2014
Author(s)
Huang, Jian-Che
Abstract
Federal Reserve has implemented quantitative easing policies since 2008, making the US monetary base increase in a large scale and federal funds rate maintain the ultra-low level until the labor market improves. With correspondingly weakening of the US dollar, it stimulated capital outflows to emerging economies. For Taiwan, a small open economy, lots of numbers in financial markets have been deeply affected by global trends. However, fed employ QE tapering in 2014 and is likely to raise funds rate at some point in 2015. Therefore, the analysis focuses on the following problems that the end of QE and raising funds rate may cause.
This paper was based on large-scale simultaneous equation macroeconometric models to establish the macroeconomic model of Taiwan. It predict Taiwan GDP growth rate will be 2.46%、4.04%、4.75% from 2014 to 2016 respectively if Federal Reserve and Taiwan central bank continue their monetary policies attitudes invariant.
Moreover, the paper used scenario analysis to simulate the end of QE and funds rate raised by Fed. We find that if fed stops QE, apparently only Taiwan stock index plunged 1.3% or so. And if fed begins to raise funds rate, Taiwan’s net export will increase due to NTD exchange rate depreciation, which generate slight positive effects on Taiwan’s economic growth, yet goes against the stock market index and total volume of the bond market. We also find that if Feds takes a tight hike in funds rate, it will have greater influence on Taiwan economy. This can also explain what the domestic investors mainly worry about are the negative shocks after the end of QE and funds rate beginning to rise. There are definitely some hidden worries showing in the stock markets with expectations of the withdrawal of capital flows.
Subjects
總體計量模型
情境分析
總體經濟
QE政策退場
美聯儲升息
SDGs
Type
thesis
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