The Effects of Exchange Rate Volatility of JPY and KRW on Taiwan Economy
Date Issued
2014
Date
2014
Author(s)
Ru-InYu
Abstract
The exchange rate volatility has always been the essential issue that people focus most on. Not only for regular people, but also that every country’s central bank regards the exchange rate policy as one of the most crucial tools to adjust the monetary policy.. Since Taiwan’s trade dependence is very high and exports accounts for more than 60% of our GDP which represents the changes of Taiwan’s relative exchange rate do affect our trade. So as the other variables that worth being discussed in the thesis.
Japan and South Korea have been Tawan’s most closely-related countries due to geographic position and also the economy. After the global financial crisis occurred, South Korean government adopted currency devaluations policy to increase their exports. Sharp Japanese Yen devaluation also probably slowed down other countries’ economies. As a result, this paper analyzed that the influence of Japanese yen and Korean won exchange rate volatility will have on Taiwan’s economy.
This paper used the data from AREMOS and TEJ in Taiwan to establish a macroeconomic model containing 81 equations, 81 endogenous and 32 exogenous variables from the 1st quarter of 1961 to the 3rd quarter of 2013. Moreover, the paper also used scenario analysis to research the related conditions such as the appreciation and devaluation of JPY and KRW respectively.
With the simulation results, when the Korean won and the Japanese yen both gradually appreciates, Taiwan’s import cost will lessen. On the other hand, while the situation of both currency depreciation separately, Taiwan’s exports will slow down its growth and other important variables may be affected. The results represent that Japan and South Korea are really related to Taiwan’s economy.
Subjects
韓圜
日圓
出口
總體經濟計量模型
情境分析
Type
thesis
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