| Summary: | 碩士 === 國立臺北大學 === 經濟學系 === 104 === During recessions, lowering interest rates is the most popular method which is used to induce economic recovery, but it does not work well. In this paper, we want to find the marginal efficiency of capital, MEC, in Taiwan from 1981 to 2014 to show that the economy is not only affected by interest rate. The idea of MEC is defined by Keynes, and it is an expected return rate from capital-assets. We build a model with the concept from Tobin, Hayashi and the neoclassical model of investment to derive MEC. There are two part of MEC, one is calculated from the actual data, and the other is calculated from the theoretical model. All the results show that when the economy booms, MEC is higher; the economy slumps, MEC is lower, and the trend for MEC is negative slope. Because MEC is lower and lower, the expected return for firms is low, too. Under this situation, lowering interest rates cannot promote investment, if we want to increase investment, how to improve MEC is an important topic.
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