China's Gradualistic Economic Approach and Financial Markets

Markus Brunnermeier, Michael Sockin and Wei Xiong

No 23194, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: China’s gradualistic approach allowed the government to learn how the economy reacts to small policy changes, and to adjust its reforms before implementing them in full. With fully developed financial markets, however, private actors’ may front-run future policy changes making it impossible for the implement policies gradually. With financial markets the government faces a time-inconsistency problem. The government would like to commit to a gradualistic approach, but after it observes the economy’s quick reaction, it has no incentive to implement its policies in small steps.

JEL-codes: E5 G10 (search for similar items in EconPapers)
Date: 2017-02
New Economics Papers: this item is included in nep-cna, nep-mac and nep-tra
Note: AP CF EFG ME POL
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Published as Markus K. Brunnermeier & Michael Sockin & Wei Xiong, 2017. "China's Gradualistic Economic Approach and Financial Markets," American Economic Review, vol 107(5), pages 608-613.

Downloads: (external link)
http://www.nber.org/papers/w23194.pdf (application/pdf)

Related works:
Journal Article: China's Gradualistic Economic Approach and Financial Markets (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:23194

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w23194

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().