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

IMF Staff Papers, Vol. 50, No. 3, pp. 458-480, 2003

Posted: 22 Apr 2005

See all articles by Andrew Feltenstein

Andrew Feltenstein

Georgia State University - Department of Economics

Saleh M. Nsouli

International Monetary Fund (IMF)

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Abstract

This paper analyzes certain issues concerning the speed of adjustment and sequencing of reforms in a transition economy. It presents a dynamic general equilibrium model parameterized with Chinese data. The model is used to generate different policy simulations that highlight the importance of the policy instruments used during the transition period. The simulations consider privatization, tariff reform, and devaluation, as well as alternative speeds of introducing these policies. They show that different speeds of adjustment, as well as sequencing of reforms, will have very different implications for macro-economic aggregates.

Keywords: Transition, sequencing of reform

JEL Classification: D58, P21

Suggested Citation

Feltenstein, Andrew and Nsouli, Saleh M., 'Big Bang' Versus Gradualism in Economic Reforms: An Intertemporal Analysis with an Application to China. IMF Staff Papers, Vol. 50, No. 3, pp. 458-480, 2003, Available at SSRN: https://ssrn.com/abstract=704607

Andrew Feltenstein (Contact Author)

Georgia State University - Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States
404-4130093 (Phone)

Saleh M. Nsouli

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

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