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


  • Andrew Feltenstein
  • Saleh M. Nsouli


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.

Suggested Citation

  • Andrew Feltenstein & Saleh M. Nsouli, 2001. "“Big Bang” Versus Gradualism in Economic Reforms; An Intertemporal Analysis with an Application to China," IMF Working Papers 01/98, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:01/98

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    References listed on IDEAS

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    Cited by:

    1. Feltenstein, Andrew & Rochon, Céline & Shamloo, Maral, 2010. "High growth and low consumption in East Asia: How to improve welfare while avoiding financial failures," Journal of Development Economics, Elsevier, vol. 91(1), pages 25-36, January.
    2. DELL'ANNO, Roberto & VILLA, Stefania, 2012. "Growth in Transition Countries: Big Bang versus Gradualism," CELPE Discussion Papers 122, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    3. Tang, Mingzhe & Coulson, N. Edward, 2017. "The impact of China's housing provident fund on homeownership, housing consumption and housing investment," Regional Science and Urban Economics, Elsevier, vol. 63(C), pages 25-37.
    4. Feltenstein, Andrew & Rochon, Céline, 2009. "Can good events lead to bad outcomes? Endogenous banking crises and fiscal policy responses," Journal of Asian Economics, Elsevier, vol. 20(4), pages 396-409, September.
    5. Hans J. Czap & Kanybek D. Nur-tegin, 2011. "Big Bang vs. Gradualism – A Productivity Analysis," EuroEconomica, Danubius University of Galati, issue 29, pages 38-56, August.
    6. Saleh M. Nsouli & Norbert Funke, 2003. "The New Partnership for Africa's Development (NEPAD) Opportunities and Challenges," IMF Working Papers 03/69, International Monetary Fund.

    More about this item


    China; Transition; sequencing of reforms; speed of adjustment; privatization; gradual privatization; tariff reform; state-owned enterprises; exchange rate policy; Computable and Other Applied General Equilibrium Models; Socialist Systems and Transitional Economies: Planning; Coordination; and Reform; Sequencing Of Reform;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics


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