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This study explores factors that affect Taiwan’s domestic car sales from a macroeconomic point of view. After conducting correlation analysis between domestic car sales and each of the nine presumed macroeconomic variables, the study selected four variables that showed greater significant correlation – Taiwan’s industrial production, consumer price index (CPI), composite index of leading indicators, and gross domestic product (GDP). Following that, with the addition of a dummy variable – commodity tax reduction – the study employs these five explanatory variables for analysis using the method of least squares and fixed effects models.
Analysis results suggest that the method of least squares is not the suitable choice for this research. On the other hand, application of fixed effects models yielded more reliable estimation results compared to when applying the method of least squares. Aside from the dummy variable (commodity tax reduction), which had a significance level of 10%, the other four explanatory variables (industrial production, consumer price index, composite index of leading indicators, and gross domestic product) all had significance levels that fell between 1-5%. This suggests that commodity tax reduction bears no significant effect on the sales of domestic cars, prompting the study to urge decision-making authorities to carefully evaluate before carrying out policies. As for the other variables, industrial production has positive impact on Taiwan’s domestic car sales; the consumer price index has negative effect on Taiwan’s domestic car sales, contrary to the study’s anticipation; the composite index of leading indicators has negative effect on Taiwan’s domestic car sales, also contrary to anticipation; last nut not least, the gross domestic product has positive effect on Taiwan’s domestic car sales. | en_US |