Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

94

Issue

8

Publisher

Utah State University Department of Economics

Publication Date

1994

Rights

Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.

First Page

1

Last Page

27

Abstract

This paper explores the fundamental relationship between average monthly inflation and its variability in Taiwan between January 1971 and June 1992. Chow test results suggest significant evidence of a structural change in inflation behavior beginning in 1982; a period of economic liberalization in Taiwan. Analysis which accounts for structural change reveals that the fundamental relationship between inflation and its variability was served by policies implemented during economic liberalization in the early 1980s. In addition, ARCH and GARCH effects fail to be significant when structural change is accounted for.

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