Oil price shocks and producer prices in Taiwan: an application of non-linear error-correction models
This study estimated the short-term and long-term pass-through effects of oil prices on inflation in Taiwan from 1981M1-2011M5, employing the producer price general index and various basic sub-indices for evaluation. The empirical results show that oil prices have long-term and short-term pass-through effects on Taiwan’s producer price indices. Moreover, producer prices have significant non-linear error-correction relationships with the oil price, output and wages, suggesting asymmetric and time-variant properties of error correction. When the deviation of price in the equilibrium is greater, the error-correction adjustment will be faster. Our findings could therefore enable the monetary authorities and manufacturers to formulate a more effective policy from the oil price shocks.
Year of publication: |
2013
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Authors: | Chou, Kuo-Wei ; Lin, Po-Chun |
Published in: |
Journal of Chinese Economic and Business Studies. - Taylor & Francis Journals, ISSN 1476-5284. - Vol. 11.2013, 1, p. 59-72
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Publisher: |
Taylor & Francis Journals |
Saved in:
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