China's Gradualistic Economic Approach and Financial MarketsMarkus K. Brunnermeier, Michael Sockin, Wei Xiong
NBER Working Paper No. 23194 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. You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.
Acknowledgments and Disclosures Machine-readable bibliographic record - MARC, RIS, BibTeX Document Object Identifier (DOI): 10.3386/w23194 Published: 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. citation courtesy of Users who downloaded this paper also downloaded* these:
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