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Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper develops a two-step approach for constructing Taiwan's financial conditions index (FCI). In the first step, by employing the Panel Analysis of Nonstationarity in Idiosyncratic and Common components (PANIC) proposed by Bai and Ng (2004),we obtain six common factors to capture the price and quantity fluctuations in the stock market, the money market and the foreign exchange market. In the second step, we construct the FCI based on these factors, with their weights determined by the method of Deutsche Bank, and find the resulting signs of these weights are consistent with the implications of macroeconomic theories. Moreover, the results of Granger causality tests and the pseudo out-of-sample experiments suggest that the FCI developed in this paper can lead the dynamics of many macroeconomic variables. This property may be helpful for improving economic forecasts. [ABSTRACT FROM AUTHOR]

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper analyzes the deteriorating income inequality of Taiwan's house- holds over the past three decades through estimates of unconditional distribution and counterfactual decomposition. It is found that changes in the distribution of household characteristics and the corresponding coefficients significantly affect income distribution with prevalent heterogeneities across the conditional quantiles. Aging of the household heads is the main reason to explain the worsening inequality, in addition to changes of the head's schooling and gender, household size, existence of spouse, and earner numbers. Focusing on the changing trends of the distributional pattern of income, this paper sheds new light on the decomposition of Taiwan's income distribution that are different from those presented in the existing studies. [ABSTRACT FROM AUTHOR]

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper completely examines the market factors, labor cost factors, and human capital factors which influence the location decisions of Taiwanese outward investment from 1998 to 2008. The empirical result which is based on the gravity model shows that the outward FDI of Taiwanese multinationals is generally affected by the market factors, but the impact of labor cost and human capital depends on different industries and market location factors which are relevant to different needs for relatively low-skilled workers and relatively highskilled workers. Our empirical results, which use sensitivity analysis to find out the variance between the industry and the market, are consistent with the predictions of our initial analysis. By the implications of the Kaitz index and information from other labor factors, we show that manufacturers will particularly emphasize technical requirements when they invest in developed countries. However, manufacturers will invest in developing countries with strong considerations of their lower labor cost. Because Mainland China has both inducements of market potential and lower-cost labor, the empirical result also shows that FDI in Mainland China is notably higher than in developed and other developing countries. [ABSTRACT FROM AUTHOR]

This paper analyzes the impacts of inflation and deflation on exchange rate pass-through for import prices both on the aggregate and industrial levels in Taiwan. Different fromexisting studies that do not specify the impact of deflation, we use the threshold model to take it into account and estimate the passthrough with general and non-oil prices. The empirical results show that the relationship of pass-through and both inflation and deflation is changed after considering the deflation impacts. The pass-through of the fuel industry varies most with inflation movements. Most industries exhibit larger pass-through in deflation than in low inflation. Hence, a clearly defined deflation regime from low inflation is necessary for avoiding a biased result when analyzing the passthrough for inflation and deflation. [ABSTRACT FROM AUTHOR]

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Taiwan Economic Forecast & Policy is the property of Institute of Economics, Academia Sinica, Taiwan Economic Forecast & Policy and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)