IMF Working Papers

“Big Bang” Versus Gradualism in Economic Reforms: An Intertemporal Analysis with an Application to China

By Andrew Feltenstein, Saleh M. Nsouli

August 1, 2001

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Andrew Feltenstein, and Saleh M. Nsouli “Big Bang” Versus Gradualism in Economic Reforms: An Intertemporal Analysis with an Application to China, (USA: International Monetary Fund, 2001) accessed November 21, 2024
Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews briefly the controversy in the literature concerning the speed of adjustment and sequencing of reforms, and presents a model parameterized with Chinese data. The model is used to generate different policy simulations to illustrate some of the key issues in the debate on the speed and sequencing of reforms, and not to provide a basis for policy recommendations for China. The simulations highlight the importance of the criteria being used for determining speed and sequencing. The paper also underscores the limitations involved in attempting to derive conclusions from the model, given the complexity of the issues.

Subject: Balance of payments, Budget planning and preparation, Current account, Economic sectors, Labor, Privatization, Public enterprises, Public sector

Keywords: Current account, Current account position, Devaluation effect, Exchange rate, Expenditure switching, Gradual privatization, Inflation rate, Maximization problem, One-step devaluation, Price level, Private sector, Privatization, Privatization simulation, Public enterprises, Public sector, Real GDP, Savings behavior, Sequencing of reforms, Speed of adjustment, Transition, WP

Publication Details

  • Pages:

    40

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2001/098

  • Stock No:

    WPIEA0982001

  • ISBN:

    9781451852141

  • ISSN:

    1018-5941

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