| Summary: | 碩士 === 東海大學 === 經濟系 === 99 === This paper investigates the long-run equilibrium and short-run dynamic adjustment relationship among the tariff rate, trade policy and economic growth, using quarterly time-series data of Taiwan from 1989Q1 to 2010Q2. We first conduct the unit root test for the above variables. Then, we perform cointegration tests for these variables. Finally, we apply the vector error correction model (VECM) and Granger causality test to analyze the dynamic relationship between trade policy and economic growth. Our empirical results show that there exists a significant negative relationship between per capita real GDP and the effective tariff rate (measured as the ratio of tariff revenues on the imports value). The decrease in the effective tariff rate stimulates the economic growth in Taiwan. This confirms that the imposition of tariff will distort the distribution of inputs and consumption, real income, trade volume and social welfare. On the other hand, the increase in per capital GDP results in the decrease in the effective tariff rate, which implies that tariff policy can be endogenously determined by the government for economic growth.
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