Reexamining the Macroeconomic Policy Cycle in Taiwan: Evidence from the Central Bank’s Monetary Reaction Function

Eric M.P. Chiu

Hitotsubashi Journal of Economics, 2020, vol. 61, issue 2, 89-110

Abstract: This paper examines evidences of opportunistic and partisan incentives in Taiwanʼs macroeconomic policy cycles. The analysis directly investigates how monetary authorities adjust domestic credit in response to different political events. Using data from the Central Bank of China (CBC), over the sample period from 1990 to 2018, the empirical results appear to support the opportunistic theory, as well as suggest that macroeconomic policy cycles are more significant in presidential elections than in the legislative elections. Moreover, as compared with the Democratic Progress Party (DPP), the Kuomintang Party (KMT) has tended to more frequently and extensively conduct expansionary monetary policies before elections, most likely in order to increase the chances of party incumbents being reelected.

Keywords: political business cycle; opportunistic theory; partisan theory; macroeconomic policy cycle; monetary reaction function; Taiwan elections (search for similar items in EconPapers)
JEL-codes: C22 E32 E58 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://hermes-ir.lib.hit-u.ac.jp/hermes/ir/re/70495/HJeco0610200890.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hit:hitjec:v:61:y:2020:i:2:p:89-110

DOI: 10.15057/hje.2020005

Access Statistics for this article

More articles in Hitotsubashi Journal of Economics from Hitotsubashi University Contact information at EDIRC.
Bibliographic data for series maintained by Digital Resources Section, Hitotsubashi University Library ().