“Big Bang” Versus Gradualism in Economic Reforms: An Intertemporal Analysis with an Application to China
August 1, 2001
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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.
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
Pages:
40
Volume:
2001
DOI:
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Issue:
098
Series:
Working Paper No. 2001/098
Stock No:
WPIEA0982001
ISBN:
9781451852141
ISSN:
1018-5941
