A dynamic model of Chinese economic gradualism via marketisation
Authors: Fu, W., Le Riche, A., Parent, A., Renard, M.-F.
Journal: Annals of Economics and Finance
Publication Date: 04/05/2026
Volume: 27
Issue: 1
Pages: 223-242
Publisher: Peking University Press
eISSN: 1529-7373
ISSN: 1529-7373
Abstract:This paper analyzes China’s economic marketization since 1978. We provide a historical account showing its success resulted from gradualism and a trial-and-error process. We then develop a two-sector Ramsey model where an ``experimental sector” with an unknown decentralized production process represents reforms. A central planner learns from this sector’s revealed productivity, explaining China’s smooth transition from a planned to a market-oriented economy through an information-learning process.
Source: Manual