Is monetary policy effective in low-interest rate period?

• Main Authors: Yi-Hsuan Huang, 黃怡瑄
• Other Authors: 莊希豐
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/34170135068325993945

碩士 === 淡江大學 === 經濟學系碩士班 === 95 === In recent years, the interest rates in Taiwan are relative low, however the economy grows slowly. It is suggested that the job central bank to decrease interest rates and to promote outputs doesn''t work out. Thus, this paper will take a monetary view to investigate the process of monetary policy transmission mechanism. We use the impulse response and variance decomposition of VAR (vector autoregressive) model to discuss whether monetary policy effective in Taiwan and Japan during the observation periods. According to the results of impulse response, we found that the monetary policy was ineffective in both Taiwan and Japan. It implies that the three price channels-- interest rate, exchange rate and stock price channels, don''t work in the sample periods. Especially, there might be some investment traps for interest rate channel in Taiwan. Besides, there is a liquidity trap in Japan, which is in accordance with what the Keynesians argued. Finally, the outcomes of variance decomposition confirm the results obtained from impulse response model.