China's Gradualistic Economic Approach and Financial Markets / Markus K. Brunnermeier, Michael Sockin, Wei Xiong.

Format:

Book

Author/Creator:

Brunnermeier, Markus K.

Contributor:

National Bureau of Economic Research.

Sockin, Michael.

Xiong, Wei.

Series:

Working Paper Series (National Bureau of Economic Research) no. w23194.

NBER working paper series no. w23194

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2017.

Summary:

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.

Notes:

Print version record

February 2017.