NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

China's Gradualistic Economic Approach and Financial Markets

Markus K. Brunnermeier, Michael Sockin, Wei Xiong

NBER Working Paper No. 23194
Issued in February 2017
NBER Program(s):Asset Pricing, Corporate Finance, Economic Fluctuations and Growth, Monetary Economics, Political Economy

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.

Access to NBER Papers

You are eligible for a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

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:
Chen, Higgins, Waggoner, and Zha w22650 Impacts of Monetary Stimulus on Credit Allocation and Macroeconomy: Evidence from China
Piketty, Yang, and Zucman w23368 Capital Accumulation, Private Property and Rising Inequality in China, 1978-2015
Chen, Ren, and Zha w23377 The Nexus of Monetary Policy and Shadow Banking in China
Bai, Hsieh, and Song w22801 The Long Shadow of a Fiscal Expansion
Chen, He, and Liu w23598 The Financing of Local Government in China: Stimulus Loan Wanes and Shadow Banking Waxes
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us