The LWW Rule and Its Application to The Case of Taiwan
Date Issued
2004
Date
2004
Author(s)
Chou, Even
DOI
zh-TW
Abstract
In macroecomic, the interest rate adjusts excess supply or demand in order to clear the market. Even the central bank used to use the interest rate as the main tool to achieve their objects. In general, the central bank can dispute “Taylor rule” as the operating instruments of monetary policy and all walks of life also to refer to it. Besides, in 2001 there is one kind of Inflation-Forecast-Based interest rule called LWW rule in Levin, Wieland and Williams’ study.It was more robust and brief than the Taylor rule.
This paper discussed like Taiwan as a small open economy system weather a policymaker to stand on LWW rule and therefore collected to analyse information.In practice model, it includes unit root test, Johansen’s Cointegration test and vector error-correction model to indicate that the existence of the long-term stability relationship short-run relationship between variables.
Finally, the above study expects to evaluate the results of the empirical evidences that provided helpful references for policy makers to forecast the overnight interest rate when the central bank plans to implement monetary policy, and were good for the investors to make decisions clearly.
Subjects
基於預期的利率法則
Inflation-Forecast-Based interest rule
Type
thesis