Graduation Year

2017

Date of Submission

4-2017

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Richard C. K. Burdekin

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© 2017 Sharon Chiang

Abstract

By combining analysis from previous literature and testing these findings through VAR analysis and correlation matrixes, this thesis analyzes how Taiwanese and mainland Chinese markets are economically interdependent on one another and whether or not the most recent data supports this. By examining the Taiwanese and mainland Chinese monthly series ranging from January 2011 to November 2016, this thesis will provide insight to the long-term effects of the previous policy changes and the effects of new policies as well. The results support previous findings that mainland Chinese markets have more influence on Taiwanese ones by showing that mainland Chinese macroeconomic variables have a significant impact on Taiwanese macroeconomic variables, but the same cannot be said for the reverse. By continuing the trend of gradually reducing restrictions in sectors outside the service industry, Taiwan and mainland China show great potential for increasing not only cross-strait economic interdependence but also peaceful prosperity in the future.

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