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

  • Andrew Feltenstein

    (International Monetary Fund)

  • Saleh M. Nsouli

    (International Monetary Fund)

This paper analyzes 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 macroeconomic aggregates. Copyright 2003, International Monetary Fund

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Article provided by Palgrave Macmillan in its journal IMF Staff Papers.

Volume (Year): 50 (2003)
Issue (Month): 3 ()
Pages: 6

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Handle: RePEc:pal:imfstp:v:50:y:2003:i:3:p:6
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  27. Michael Mussa, 1984. "The Adjustment Process and the Timing of Trade Liberalization," NBER Working Papers 1458, National Bureau of Economic Research, Inc.
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