“Big Bang” Versus Gradualism in Economic Reforms: An Intertemporal Analysis with an Application to China
IMF Working Papers, August 1, 2001
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- “Big Bang” Versus Gradualism in Economic Reforms: An Intertemporal Analysis with an Application to China
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Bibliographic details
- Authors: Andrew Feltenstein, Saleh M. Nsouli
- Published: August 1, 2001
- Series: IMF Working Papers
Summary
- Authors: Andrew Feltenstein, Saleh M. Nsouli
- Date: August 1, 2001
- Series: IMF Working Papers, Working Paper No. 2001/098
- Core objective: Review the controversy on the speed of adjustment and sequencing of reforms and present a model parameterized with Chinese data.
- Intended use of model: Generate different policy simulations to illustrate key issues in the debate on the speed and sequencing of reforms; explicitly not intended as a basis for policy recommendations for China.
- Emphasis: The simulations highlight the importance of the criteria used to determine speed and sequencing of reforms.
Key Findings from the Simulations
- The outcomes from the model depend critically on the criteria used to evaluate speed and sequencing.
- The model-generated policy simulations are illustrative of key debates rather than definitive prescriptions.
- The paper underscores that deriving firm conclusions from the model is limited by the complexity of the issues.
Research Scope and Thematic Coverage
- Subjects: Balance of payments, Budget planning and preparation, Current account, Economic sectors, Labor, Privatization, Public enterprises, Public sector
- Keywords (as listed): 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
Limitations and Cautions
- The paper explicitly states limitations involved in attempting to derive conclusions from the model because of the complexity of the issues.
- The Working Paper carries a 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."