Globalization and Stock Fluctuations Using Shift-share Identity

With the financial integration process progressing and information technology (IT) industry in Taiwan with international competitiveness. The purpose of this paper is to understand the effect of global economy on the IT price change in Taiwan. We first use SS analysis to decompose stock fluctuations into four effects Dynamic SS computation is then used to trace out evolution of four effects for the IT price change in Taiwan stock market. It is found that global economy is very important for IT stock while Taiwanese stock market is negatively related to IT stock price.