Date of Award:

5-1992

Document Type:

Thesis

Degree Name:

Master of Science (MS)

Department:

Economics and Finance

Department name when degree awarded

Economics

Committee Chair(s)

Herbert H. Fullerton

Committee

Herbert H. Fullerton

Committee

Basudeb Biswas

Committee

Carolyn Rhodes

Abstract

Since the conclusion of World War II, Taiwan, the Republic of China (ROC), has developed into an industrialized country following a long period of severe inflation. Taiwan has produced a successful example of economic development through export expansion. Exports and imports of Taiwan increased from approximately 10 percent of the gross national product (GNP) in the 1950s to more than 45 percent in the 1980s. The role of Taiwan's foreign exchange rates and traderelated policies on exports and imports was examined in this study.

Trade-related policies implemented by the government of ROC were documented from 1950 to 1980 by categorizing the past 30 years into import substitution, export promotion, external shocks, and the 1980s trade liberalization periods. In addition, this study analyzed quarterly import and export data from 21 sectors between 1981 and 1991 to measure the effects of changes on the exchange rate. variables included in the regression analysis were GNP of Taiwan and exchange rate for import demand functions and GNP of the U.S., export price index in Taiwan and Korea, and exchange rate for the export demand function. Partial auto- correlation functions were estimated and examined for 21 export and import commodity groups to determine the appropriate number of lags in the demand function. In sectors in which regressions were found to be significant, an econometric partial adjustment model was used for estimating short- and long-run exchange rate elasticities.

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