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

Author: Mr. Andrew Feltenstein and Mr. Saleh M. Nsouli

Volume/Issue: Volume 2001 Issue 098

Publication date: August 2001

ISBN: 9781451852141

$20.00

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Exports and Imports , Economics- Macroeconomics , WP , real GDP , price level , exchange rate , Transition , sequencing of reforms , speed of adjustment , private sector , gradual privatization , expenditure switching , devaluation effect , current account position , inflation rate , maximization problem , privatization simulation , one-step devaluation , savings behavior , Privatization , Current account , Public enterprises , Public sector

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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.