A Marco-Econometric Research on Saving Rate in Taiwan
Date Issued
2010
Date
2010
Author(s)
Hsu, Wei-Min
Abstract
In the past, The Economic Miracle from Taiwan was related to high saving rates and the corresponding high investment rates, many evidences also show that a country''s saving is strongly connected to its economic growth. To the agricultural society in its early stage of development, high saving rate is beneficial to the transformation from an economic to an industrial system, and yet to the economic system that is experiencing its maturation, high saving rate could indicate people''s uncertainty to the future. The reasons for such an uncertainty could be politic, stock price, prices of commodities, and international relations: all causing the increase in the behaviors of precautionary savings. In the recent years, Taiwan''s economy is in its ever-changing state. From domestic view, the aging population, and from foreign affairs, such as China signing the ECFA, all these are closely tied-up with Taiwan''s future economic development. Yet what role does the saving rate play in a time like this?
This article collects the economic variables and data from each of Taiwan''s macroeconomic variables and of the foreign department''s variables to build a macroeconomic model, which includes 50 structural equations, 32 definition equations and 81 endogenous variables, 20 exogenous variables. The period is from the first season of 1986 to the fourth season of 2009. The Model performs reasonably and well in both static test and outside of sample forecasts. In the scenario analysis, it analyzes three kinds of scenarios: (1) non-governmental saving rate (2) dependency ratio (3) spontaneous private investment. The model explores the possible impact on Taiwan''s economy as a consequence of any change in these scenarios. The outcome shows that the increase in non-governmental saving rate is beneficial to the economic growth, the increase in dependency ratio is, in the long term, unfavorable to Taiwan''s economic development, and the increase in spontaneous private investment is not only beneficial to the economic development, but also advantageous to the improvement of investment environment in the long run.
Subjects
macroeconomic model
saving rate
dependency ratio
private investment
SDGs
Type
thesis
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