THE MACROECONOMIC EFFECTS OF ENHANCED REFORMS IN CHINA

Zhihong Jian () and Yeqing Yang
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Zhihong Jian: School of Economics, Huazhong University of Science and Technology, No. 1037 Luoyu Road, Wuhan 430074, Hubei Province, P. R. China
Yeqing Yang: School of Economics, Huazhong University of Science and Technology, No. 1037 Luoyu Road, Wuhan 430074, Hubei Province, P. R. China

The Singapore Economic Review (SER), 2020, vol. 65, issue 06, 1619-1644

Abstract: Motivated by the idea that substantive reforms in China always happen intermittently and randomly, this paper constructs an RBC model, augmented with a shock that reflects the role of reforms and its randomly occurring character, to investigate the macroeconomic effects of enhancing the reform intensity. An increase in the average intensity of reforms leads to a higher economic growth rate permanently and provides sustainable support for economy when the potential growth rate declines. But it decreases the ergodic steady state of the detrended output, and this could have an adverse effect on economic growth in the short run.

Keywords: China; intensity of reforms; economic growth (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0217590819500358

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