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Macroeconomic Interdependence Between Mainland China and Taiwan: A Cross-Strait Perspective on Globalization


  • Richard C. K. Burdekin
  • Hsin-hui I. H. Whited


Macroeconomic interdependence between China and Taiwan is assessed in terms of an array of output, price, money, and stock price measures for each economy. Sizeable simple correlations between these variables are accompanied by significant bidirectional Granger causality in many cases. Further evidence of interdependence arises from impulse response and variance decomposition analysis. As expected, the effects of mainland China variables on Taiwan appear to be stronger than the reverse. The indicated responses of the Taiwanese M2 money supply to developments in China are particularly noteworthy as M2 was generally the central bank target variable over the sample period.

Suggested Citation

  • Richard C. K. Burdekin & Hsin-hui I. H. Whited, 2009. "Macroeconomic Interdependence Between Mainland China and Taiwan: A Cross-Strait Perspective on Globalization," Chinese Economy, Taylor & Francis Journals, vol. 42(1), pages 5-39, January.
  • Handle: RePEc:mes:chinec:v:42:y:2009:i:1:p:5-39

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    References listed on IDEAS

    1. Lionel Fontagné & Guillaume Gaulier & Soledad Zignago, 2008. "Specialization across varieties and North-South competition," Economic Policy, CEPR;CES;MSH, vol. 23, pages 51-91, January.
    2. Guillaume Gaulier & Françoise Lemoine & Deniz Ünal-Kesenci, 2005. "China’s Integration in East Asia: Production Sharing, FDI & High-Tech Trade," Working Papers 2005-09, CEPII research center.
    3. Kim Song Tan & Hoe Ee Khor, 2006. "China's Changing Economic Structure and Implications for Regional Patterns of Trade, Production and Integration," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 14(6), pages 1-19.
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    Cited by:

    1. Richard C.K. Burdekin & Yijing Shen & Hsin- hui I.H. Whited, 2013. "Cross- Strait linkages: historica perspective and empirical evidence," Chapters,in: Economic Integration Across the Taiwan Strait, chapter 1, pages 1-29 Edward Elgar Publishing.

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