Economic Experts and Taiwan's Policy Path
United Daily News editorial (Taipei, Taiwan, ROC)
October 25, 2012
Summary: American economists Thomas Sargent and Christopher A. Sims have been
jointly awarded the 2011 Nobel Prize in Economics for their empirical
research on cause and effect in the macroeconomy. Sargent was recently
interviewed by the United Daily News Economic Times. Sims met with
members of the public today. People on Taiwan are actively seeking a
response to their economic hardships. These experts have arrived at just
the right time. They are expected to revive exploration and discussion
of economic theory.
Full Text below:
American economists Thomas Sargent and Christopher A. Sims have been jointly awarded the 2011 Nobel Prize in Economics for their empirical research on cause and effect in the macroeconomy. Sargent was recently interviewed by the United Daily News Economic Times. Sims met with members of the public today. People on Taiwan are actively seeking a response to their economic hardships. These experts have arrived at just the right time. They are expected to revive exploration and discussion of economic theory.
Sims' most important contribution was to the methodology of economics. His Vector Autoregression, or VAR, uses biochemical variables to confirm the causal relationship between variables. He claims he can reduce over-reliance on hypothetical assumptions by using data derived from the causal relationship between economic policies. VAR also explains how the economy is affected by temporary changes in economic policy and other factors. Sims received the prize for an important reason. His method better clarifies cause and effect. It is not limited to a discussion of the relevance of policy. His concept is important to statistical science. More importantly, governments can use his concepts in the formulation of policy. They can use them to accurately judge the interaction between a wide range of variables. They can use them to modify their regulatory policies according to economic development and anticipated targets. They can use them to alter the content of their policy according to a changing economic situation. Only then can policies be implemented smoothly and achieve the desired results.
Now apply these theoretical observations to our own situation. Take tecently released economic data. As we approach the end of the third quarter, we are finally witnessing the dawn of an economic recovery. Exports have grown 10.4%. We have emerged from several months of recession. This year export orders have ceased to decline and increased 1.9%. The domestic economy suffered as a result of poor fundamentals. Government officials were finally able to breath a sigh of relief. But the 2011 starting base was relatively low. Has the economy really recovered? That remains to be seen. The government's recent economic stimulus package has not produced perceptible results. Faced with this situation, the government should carefully examine the content of its policies and the reasons for public disappointment. It should think about how to amend them or supplement them. It should further integrate its administrative team. It should enable fiscal, monetary, educational, and labor policies to complement each other. It should strengthen its economic stimulus package. The government seems to think it has done enough. It seems to think that the reason the public fails to perceive the improvement is insufficient publicity. Therefore it is using the Internet to publicize its achievements. It also hopes that civil servants will use community websites as a propaganda tool. But this sort of thinking inverts cause and effect. It underscores the importance of Sims' theoretical elaboration of the relationship between cause and effect.
Now look ahead to the 2013 international economic situation. US government spending may be reduced due to the fiscal cliff. Major forecasting organizations think that the United States' 2013 economic growth rate will fall by 0.2 to 0.3 percentage points over the current year. Japan's reconstruction spending has also passed its peak. Its 2013 economic growth rate will be reduced by about one percentage point; The Chinese mainland is experiencing a smooth succession in leadership. It may introduce new economic policies to promote economic performance. But any conclusions about their effectiveness must await their actual policy content. The fiscal problems of the nations within the European Union are gradually fading. Growth is expected to resume in 2013. But for the moment their economies are still weak.
Now take Taiwan. As a small open economy, is must be especially careful. The process of economic globalization continues. Economic and political policies have already broken through national boundaries. International trade impacts other countries. Governments intervene in their own national economies and affect economic cycles. International trade, international capital flows, and exchange rate changes have a spillover effect on other countries' economies. Therefore, future policy responses to the international situation should consider the impact of these policies. They should consider the spillover effects of these policies on other countries. The formulation of economic policy must consider the domestic situation. But it must also consider the international impact. It must consider other countries' policy response. It must consider how their responses will affect one's own policies, including regional economic integration, or the promotion of free trade zones. It must consider the links between various nations' industrial production. It must pay attention to domestic economic policy direction. Only then can it make the most of its policies. Only then can it fully realize the benefits of its policies.
美國經濟學家沙金特教授（Thomas Sargent）與席姆斯（Christopher A. Sims）教授以他們在「總體經濟因果關係的實證研究」方面的貢獻，在二○一一年共同獲得諾貝爾經濟學獎。繼日前沙金特應聯合報系經濟日報之請到訪之後，席姆斯也在今日會見各界，對於正在積極尋找因應經濟困局對策的台灣，大師的來訪正當其時，預料將再度引起相關理論的探索與討論。
提出「向量自我迴歸」（Vector Autoregression, VAR），透過將所有變數內生化的作法，來驗證變數之間的因果關係。並據以主張，根據數據中呈現的因果關係來制訂經濟政策，就能減少過度依賴理論假設所造成的問題；此外，也可應用於分析經濟如何受到經濟政策臨時性改變及其他因素的影響。席姆斯獲獎的重要原因，在於他的方法更能釐清因果關係，而非僅止於討論相關程度，這樣的概念除了在統計學上相當重要之外，政府在制訂執行各類政策時，也可遵循這樣的概念，正確且全盤考量各種變數之間的相互影響，以根據經濟發展情況制訂調控政策和預期目標，同時又根據經濟形勢的變化和政策實施效果來調整政策內容，才能讓政策順利推動並得到預期的效果。