An Effect of Export Orders and China Rising on Taiwan Wage-Phillips Curve

Abstract

Taiwan faces the average monthly real wages fall to the 1998 level, but the researches only express the fact without discussing the reasons. Many Taiwan scholars try to explain the change of wages according to the economic theories such as New Keynesian theory or wage curve from the average view which is traditional linear regressive model, and cannot accurate estimate and catch the pattern of real wages. The paper investigates a wage dynamic Phillips curve where adds the important factors of export orders and monetary policy. In the estimated results between linear and curve-linear regressive models, there indeed exists a higher explainable power and less MSE of curve-linear model. Moreover, the growth rates of Taiwan real wages are intervened by government policy and affected by the international recession.