Exchange Rate and Stock Prices in Macro-Econometric Analysis
Date Issued
2010
Date
2010
Author(s)
Yang, Yao-Hua
Abstract
The main purpose of this study is constructing a macroeconomic model of Taiwan, and simulating how exchange rate and stock index fluctuations affect Taiwan''s overall economy. Based on the current status of Taiwan, analysis:
(1) The NT dollar exchange rate: the empirical analyses show NT dollar depreciation does have a positive impact on real exports and NT dollar appreciation would decrease real exports. In addition, since Taiwan is an open economy, the total value of exports and overall economic performance are closely related; therefore, NT appreciation (depreciation) have the effect to slow down (stimulate) overall economy. Not only affect the real output, the value of NT dollar can also affect consumer price index; for example , appreciation of NT dollars can slow down the rate of increasing consumer price index.
(2) Stock Index: The empirical results also provide us a suggestion that the increase of stock index can bring positive wealth effect for people. In addition to increase during the expansion of economy, it also makes private consumption increased in real terms. Besides the expansion of economy, it also increases the real private consumption. On the contrary, the decline in the stock index reduces the wealth, making reduction in private real spending.
(3) U.S. economic growth: The empirical results suggest that when the U.S. economic growth is higher than expected, it will enhances Taiwan''s economic growth and help to improve the rate of unemployment and to promote private investment.
Subjects
Macro-Econometric
exchange rate
stock index
closely related
SDGs
Type
thesis
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