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An Estimated Dynamic Stochastic General Equilibrium Model of Taiwanese Economy


  • Wing Leong Teo

    (National Taiwan University)


In this paper, I estimate an open economy DSGE model for the Taiwanese economy. The model features multiple sources of real and nominal rigidities, including price and wage stickiness, investment and bond adjustment costs, as well as incomplete pass-through of exchange rates. Contrary to the usual practice in the literature, monetary policy is modeled as a money supply rule instead of an interest rate rule, to be consistent with the policy regime in Taiwan. The model is estimated using Bayesian techniques. The estimated model is used to characterize monetary policy in Taiwan and assess relative importance of various shocks and frictions in Taiwanese economy

Suggested Citation

  • Wing Leong Teo, 2006. "An Estimated Dynamic Stochastic General Equilibrium Model of Taiwanese Economy," Computing in Economics and Finance 2006 334, Society for Computational Economics.
  • Handle: RePEc:sce:scecfa:334

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    References listed on IDEAS

    1. Dorofeenko, Victor & Shorish, Jamsheed, 2005. "Partial differential equation modelling for stochastic fixed strategy distributed systems," Journal of Economic Dynamics and Control, Elsevier, vol. 29(1-2), pages 335-367, January.
    2. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, January.
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    Cited by:

    1. Binner, Jane & Chen, Shu-Heng & Lai, Ke-Hung & Mullineux, Andrew & Swofford, James L., 2011. "Do the ASEAN countries and Taiwan form a common currency area?," Journal of International Money and Finance, Elsevier, vol. 30(7), pages 1429-1435.
    2. McNelis, Paul D. & Yoshino, Naoyuki, 2016. "Finding stability in a time of prolonged crisis: Unconventional policy rules for Japan," Journal of Financial Stability, Elsevier, vol. 27(C), pages 122-136.

    More about this item


    DSGE model; Bayesian Structural Estimation; Monetary Policy; Business Cycle;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance


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