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A Model for National Income Determination in Taiwan

Author

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  • Gregory C. Chow

    (Princeton University & Academia Sinica, Taiwan)

Abstract

Following Chow (1985 and 2010) and using annual data from 1951 to 2010 for Taiwan this paper estimates a consumption function based on the permanent income hypothesis and an investment function based on the accelerations principle. The data support the permanent income hypothesis Friedman (1957) whereas the permanent income hypothesis of Hall (1978) was supported in Chow (1985 and 2010). The accelerations principle is strongly supported, as in the case of China. An explanation why the two economies have different consumption functions is given.

Suggested Citation

  • Gregory C. Chow, 2011. "A Model for National Income Determination in Taiwan," Working Papers 1335, Princeton University, Department of Economics, Center for Economic Policy Studies..
    • Handle: RePEc:pri:cepsud:222
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    References listed on IDEAS

    as
    1. Milton Friedman, 1957. "A Theory of the Consumption Function," NBER Books, National Bureau of Economic Research, Inc, number frie57-1.
    2. Chow, Gregory C. & Wang, Peng, 2010. "The empirics of inflation in China," Economics Letters, Elsevier, vol. 109(1), pages 28-30, October.
    3. Chow, Gregory C., 2010. "Note on a model of Chinese national income determination," Economics Letters, Elsevier, vol. 106(3), pages 195-196, March.
    4. Milton Friedman, 1957. "Introduction to "A Theory of the Consumption Function"," NBER Chapters, in: A Theory of the Consumption Function, pages 1-6, National Bureau of Economic Research, Inc.
    5. Chow, Gregory C, 1985. "A Model of Chinese National Income Determination," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 782-792, August.
    6. Chow, Gregory C., 2011. "Lessons from studying a simple macroeconomic model for China," Economics Letters, Elsevier, vol. 112(3), pages 233-235, September.
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    Cited by:

    1. Kyaw Kyaw Lynn, 2015. "An Analysis of the Relationship between Foreign Trade and Economic Growth in Myanmar during 1990-2014," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 1(4), pages 114-131.

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    More about this item

    Keywords

    consumption; investment; permanent income; Taiwan; macroeconomics;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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