The speed of adjustment and the sequencing of economic reforms: Issues and guidelines for policymakers

International Journal of Social Economics

Volumn 32, Issue 9, 2005, Pages 740-766

  Nsouli, Saleh M ^a   Rached, Mounir ^a   Funke, Norbert ^a  

^a INTERNATIONAL MONETARY FUND   (United States)

Author keywords

Applied economics; Economic policy; Economic reform

Indexed keywords

EID: 23744499160     PISSN: 03068293     EISSN: None     Source Type: Journal    
DOI: 10.1108/03068290510612566     Document Type: Article

References (104)

1. Agénor, P.R. and Montiel, P.J. (1999), Development Macroeconomics, Princeton University Press, Princeton, NJ.
2. Ahluwalia, M.S. (1996), “Structural adjustment and reform in developing countries”, in Helleiner, G.K. (Ed.), The International Monetary and Financial System: Developing Country Perspectives, Macmillan Press, New York, NY, pp. 193-228.
3. Barnett, S. (2000), “Evidence on the fiscal and macroeconomic impact of privatization”, IMF Working Paper, No. 00/130, International Monetary Fund, Washington, DC.
4. Bekaert, G., Harvey, C.R. and Lundblad, C. (2001), “Does financial liberalization spur growth?”, NBER Working Paper, No. 8245, National Bureau of Economic Research, Cambridge, MA.
5. Bhattacharya, A. (1997), “Pace, sequencing and credibility of structural reform”, World Development, Vol. 25 No. 7, pp. 1045-61.
6. Bhattacharya, A. (1999), “Political economy aspects of trade and financial liberalization: implications for sequencing”, IMF Working Paper, No. 99/159, International Monetary Fund, Washington, DC.
7. Bisat, A., Johnston, R.B. and Sundararajan, V. (1992), “Issues in managing and sequencing financial sector reforms: lessons from experiences in five developing countries”, IMF Working Paper, No. 92/82, International Monetary Fund, Washington, DC.
8. Bresser, T. (1987), “Inflation and the cruzado plan”, World Development, Vol. 15, pp. 1035-44.
9. Bruno, M. (1992), “Stabilization and reform in Eastern Europe: a preliminary evaluation”, IMF Staff Papers, Vol. 39 No. 4, pp. 741-77.
10. Caprio, G., Atiyas, I. and Hanso, J. (Eds) (1994), Financial Reform – Theory and Experience, Cambridge University Press, Cambridge.
11. Castanheira, M. and Roland, G. (2000), “The optimal speed of transition: a general equilibrium analysis”, International Economic Review, Vol. 41 No. 1, pp. 219-39.
12. Collier, P. and Gunning, J.W. (1999), “The IMF's role in structural adjustment”, Economic Journal, Vol. 109, pp. 634-61.
13. Cukierman, A. and Tommasi, M. (1998), “Credibility of policymakers and of economic reforms”, in Sturzenegger, F. (Ed.), The Political Economy of Reform, MIT Press, Cambridge, MA, pp. 329-47.
14. Dewatripont, M. and Roland, G. (1992), “Virtues of gradualism and legitimacy in transition to a market economy”, Economic Journal, Vol. 102, pp. 291-300.
15. Dewatripont, M. and Roland, G. (1994), “Economic reform and dynamic political constraints”, in Persson, T. and Tabellini, G. (Eds), Monetary and Fiscal Policy II, Chapter 15, MIT Press, Cambridge, MA, pp. 415-57.
16. Dewatripont, M. and Roland, G. (1995), “The design of reform packages under uncertainty”, American Economic Review, Vol. 85, pp. 1208-23.
17. Dollar, D. (1992), “Outward-oriented developing economies really do grow more rapidly: evidence from 95 LDCs, 1976-85”, Economic Development and Cultural Change, pp. 523-44.
18. Dornbusch, R. (1991), “Credibility and stabilization”, Quarterly Journal of Economics, Vol. 106, pp. 837-50.
19. Dornbusch, R. (1992), “The case for trade liberalization in developing countries”, Journal of Economic Perspectives, Vol. 6 No. 1, pp. 69-85.
20. Dziobek, C. and Pazarbasioglu, C. (1997), “Lessons from systemic bank restructuring: a survey of 24 countries”, IMF Working Paper, No. 97/161, International Monetary Fund, Washington, DC.
21. Ebrill, L., Stotsky, J. and Gropp, R. (1999), “Revenue implications of trade liberalization”, IMF Occasional Paper, No. 180, International Monetary Fund, Washington, DC.
22. Edwards, S. (1990), “The sequencing of economic reform: analytical issues and lessons from Latin American experiences”, World Economy, Vol. 13, pp. 1-14.
23. Edwards, S. (1996), “A tale of two crises: Chile and Mexico”, NBER Working Paper, No. 5794, National Bureau of Economic Research, Cambridge, MA.
24. Edwards, S. (1998), “Capital flows, real exchange rates, and capital controls: some Latin American experiences”, NBER Working Paper, No. 6800, National Bureau of Economic Research, Cambridge, MA.
25. Edwards, S. (2001), “Capital mobility and economic performance: are emerging economies different?”, NBER Working Paper, No. 8076, National Bureau of Economic Research, Cambridge, MA.
26. Eichengreen, B., Mussa, M., Dell'Ariccia, G., Detragiache, E., Milesi-Ferretti, G.M. and Tweedie, A. (1998), “Capital account liberalization: theoretical and practical aspects”, IMF Occasional Paper, No. 172, International Monetary Fund, Washington, DC, pp. 1-27.
27. Eichengreen, B., Mussa, M., Dell'Ariccia, G., Detragiache, E., Milesi-Ferretti, G.M. and Tweedie, A. (1999), “Liberalizing capital movements”, Economic Issues, International Monetary Fund, Washington, DC.
28. Erbaş, S.N. (2002), “Primer on reforms in a second-best ambiguous environment: a case for gradualism”, IMF Working Paper, No. WP/02/50, International Monetary Fund, Washington, DC.
29. Falvey, R. and Kim, C.D. (1992), “Timing and sequencing issues in trade liberalization”, Economic Journal, Vol. 102 No. 413, pp. 908-24.
30. Feltenstein, A. and Nsouli, S.M. (2003), “‘Big Bang’ versus gradualism in economic reforms: an intertemporal analysis with an application to China”, IMF Staff Papers, Vol. 50 No. 3, pp. 458-80.
31. Fischer, S. and Gelb, A. (1991), “The process of socialist economic transformation”, Journal of Economic Perspectives, Vol. 5 No. 4, pp. 91-106.
32. Fischer, S. and Sahay, R. (2000), “The transition economies after ten tears”, NBER Working Paper, No. 7664, National Bureau of Economic Research, Cambridge, MA.
33. Fuchs-Schündeln, N. and Funke, N. (2004), “Stock market liberalizations: financial and macroeconomic implications”, Review of World Economics, Vol. 139 No. 4, pp. 730-61.
34. Fukushima, T. and Kim, N. (1989), “Welfare improving tariff changes: a case of many goods and countries”, Journal of International Economics, Vol. 26 Nos 3/4, pp. 383-8.
35. Funke, N. (1993), “Timing and sequencing of reforms: competing views and the role of credibility”, Kyklos, Vol. 46, pp. 337-62.
36. Galbis, V. (1994), “Sequencing of financial sector reforms: a review”, IMF Working Paper, No. 94/101, International Monetary Fund, Washington, DC.
37. Gelb, A.H. and Gray, C.W. (1991), “The transformation of economies in Central and Eastern Europe: issues, progress and prospects”, World Bank Policy and Research, Series No. 17, World Bank, Washington, DC.
38. Gupta, N., Ham, J.C. and Svejnar, J. (2000), “Priorities and sequencing in privatization: theory and evidence from the Czech Republic”, Working Paper, No. 323, William Davidson Institute, Ann Arbor, MI.
39. Hanson, J.A. (1992), “Opening the capital account: a survey of issues and results”, World Bank Working Paper, No. WPS 901, World Bank, Washington, DC.
40. Harwood, A. and Smith, B.L.R. (Eds) (1997), Sequencing? Financial Strategies for Developing Countries, Brookings Institution Press, Washington, DC.
41. Havrylyshyn, O. and McGettigan, D. (1999), “Privatization in transition countries: lessons of the first decade”, Economic Issues, No. 18, August.
42. Havrylyshyn, O. and Nsouli, S. (2001), A Decade of Transition: Achievements and Challenges, International Monetary Fund, Washington, DC.
43. Hernández-Catá, E. (1999), “Price liberalization, money growth, and inflation during the transition to a market economy”, IMF Working Paper, No. 99/76, International Monetary Fund, Washington, DC.
44. Hiemenz, U., Nunnenkamp, P., Spinanger, D. and Langhammer, R.J. (1992), “The international competitiveness of developing countries for risk capital”, Kieler Studien, Vol. 242.
45. Hinds, M. (1991), “Issues in the introduction of market forces in Eastern European socialist economies”, in Commander, S. (Ed.), Managing Inflation in Socialist Economies in Transition, World Bank, Washington, DC, pp. 121-54.
46. Institute of International Finance, Inc. (1999), Creating an Investor Relations Office: A Step toward Implementing a Proactive Strategy of Investor Relations, Institute of International Finance, Inc., Washington, DC, August.
47. International Monetary Fund (2000), “The role of foreign banks in emerging markets”, International Capital Markets – Developments, Prospects and Key Policy Issues, World Economic and Financial Surveys, Chapter 6, September, Washington, DC, pp. 152-82.
48. International Monetary Fund (2001), “International financial integration and developing countries”, World Economic Outlook – The Information Technology Revolution: A Survey by the Staff of the International Monetary Fund, Chapter 4, World Economic and Financial Surveys, October, Washington, DC, pp. 145-67.
49. Ishii, S. and Habermeier, K. (2002), “Capital account liberalization and financial sector stability”, IMF Occasional Paper, No. 211, International Monetary Fund, Washington, DC.
50. Johnston, B.R. (1994), “The speed of financial sector reform: risks and strategies”, IMF Paper on Policy Analysis and Assessment, No. 94/26, International Monetary Fund, Washington, DC.
51. Johnston, B.R. (1998), “Sequencing capital account liberalizations and financial sector reform”, IMF Paper on Policy Analysis and Assessment, No. 98/8, International Monetary Fund, Washington, DC.
52. Johnston, B.R. and Sundararajan, V. (Eds) (1999), Sequencing Financial Sector Reforms: Country Experiences and Issues, International Monetary Fund, Washington, DC.
53. Khan, M.S. and Senhadji, A. (2000), “Financial development and economic growth – an overview”, IMF Working Paper, No. 00/209, International Monetary Fund, Washington, DC.
54. Khan, M.S. and Zahler, R. (1987), “The liberalization of trade and capital flows in developing countries: some theoretical and empirical issues”, in Connolly, M. and Gonzalez-Vega, C. (Eds), Economic Reform and Stabilization in Latin America, Praeger, New York, NY.
55. Khatkhate, D. (1998), “Timing and sequencing of financial sector reforms: evidence and rationale”, Occasional Paper, No. 21, The South East Asian Central Banks (SEACEN) Research and Training Center, Kuala Lumpur.
56. Kornai, J. (1986), The Economics of Shortage, North Holland, Amsterdam.
57. Krueger, A.O. (1981), “Interactions between inflation and trade-regime objectives in stabilization programs”, in William, R.C. and Weintraub, S. (Eds), Economic Stabilization in Developing Countries, The Brookings Institution, Washington, DC, pp. 83-117.
58. Krueger, A.O. (1984), “Problems of liberalization”, in Arnold, C.H. (Ed.), World Economic Growth, ICS Press, San Francisco, CA, pp. 403-23.
59. Krueger, A.O. (1996), The Political Economy of Trade Protection, University of Chicago Press, Chicago, IL.
60. Lal, D. (1987), “The political economy of economic liberalization”, World Bank Economic Review, Vol. 1 No. 2, pp. 273-99.
61. Lal, D. and Snape, R.M. (2001), Trade Development, and Political Economy: Essays in Honor of Anne O. Krueger, Palgrave, New York, NY.
62. Lau, L.J., Qian, Y. and Roland, G. (2000), “Reform without losers: an interpretation of China's dual-track approach to transition”, Journal of Political Economy, Vol. 108 No. 1, pp. 120-43.
63. Laurens, B. and Cardoso, J. (1998), “Managing capital flows: lessons from the experience of Chile”, IMF Working Paper, No. WP/98/168, International Monetary Fund, Washington, DC.
64. Lian, P. and Wei, S-J. (1998), “To shock or not to shock? Economics and political economy of large-scale reforms”, Economics and Politics, Vol. 9 No. 2, pp. 115-31.
65. Lim, E-G. (2001), “Determinants of, and the relation between, foreign direct investment and growth: a summary of the recent literature”, IMF Working Paper, No. 01/175, International Monetary Fund, Washington, DC.
66. Lipton, D. and Sachs, J. (1990), “Creating a market economy in Eastern Europe: the case of Poland”, Brookings Papers on Economic Activity, Vol. 1, pp. 75-133.
67. Little, I., Scitovsky, T. and Scott, M. (1970), Industry and Trade in Some Developing Countries: A Comparative Study, Oxford University Press, London.
68. Lora, E. (1998), “What makes reforms likely? Timing and sequencing of structural reforms in Latin America”, Working Paper, No. 424, Research Dept., Inter-American Development Bank, Washington, DC.
69. McKinnon, R.I. (1973), Money and Capital in Economic Development, Brookings Institution, Washington, DC.
70. McKinnon, R.I. (1982), “The order of economic liberalization: lessons from Chile and Argentina”, in Brunner, K. and Meltzer, A.H. (Eds), Economic Policy in a World of Change, Carnegie-Rochester Conference Series on Public Policy, Elsevier, New York, NY, pp. 159-86.
71. McKinnon, R.I. (1991), The Order of Economic Liberalization, Johns Hopkins University Press, Baltimore, MD.
72. Martinelli, C. and Tommasi, M. (1997), “Sequencing of economic reforms in the presence of political constraints”, Economics and Politics, Vol. 9 No. 2, pp. 115-31.
73. Mathieson, D.J. and Suarez, L.R. (1992), “Liberalization of the capital account: experiences and issues”, IMF Working Paper, No. 92/46, International Monetary Fund, Washington, DC.
74. Mehlum, H. (2001), “Speed of adjustment and self-fulfilling failure of economic reform”, Journal of International Economics, Vol. 53, pp. 149-67.
75. Michaely, M., Papageorgiou, D. and Choksi, A.M. (1991), Liberalizing Foreign Trade: Lessons of Experience in the Developing World, Basil Blackwell, Oxford.
76. Murphy, K., Shleifer, A. and Vishny, R. (1992), “The transition to a market economy: pitfalls of partial reform”, Quarterly Journal of Economics, Vol. 107 No. 3, pp. 889-906.
77. Mussa, M. (1984), “The adjustment process and the timing of trade liberalization”, NBER Working Paper, No. 1458, National Bureau of Economic Research, Cambridge, MA.
78. Nsouli, S. (1996), “Current account convertibility: anachronism or transition?”, in Guitián, M. and Nsouli, S.M. (Eds), Currency Convertibility in the Middle East and North Africa, International Monetary Fund, Washington, DC.
79. Olson, M. (1982), The Rise and Decline of Nations: Economic Growth, Stagflation and Social Rigidities, Yale University Press, New Haven, CT, London.
80. Papageorgiou, D., Michaely, M. and Choksi, A. (1986), “The phasing of a trade liberalization policy: preliminary evidence”, CPD Discussion Paper, No. 1986-42, Country Policy Department, World Bank, Washington, DC.
81. Quinn, D. (1997), “The correlates of change in international financial regulation”, American Political Science Review, Vol. 91, pp. 531-51.
82. Rodriguez, F. and Rodrik, D. (2000), “Trade policy and economic growth: a skeptic's guide to the cross-national evidence”, available at: http://ksghome.harvard.edu/∼.drodrik.academic.ksg/papers.html.
83. Rodrik, D. (1987), “Trade and capital-account liberalization in a Keynesian economy”, Journal of International Economics, Vol. 23, pp. 113-29.
84. Rodrik, D. (1989), “Credibility of trade reform – a policy maker's guide”, The World Economy, Vol. 12 No. 1, pp. 1-16.
85. Rodrik, D. (1992), “The limits of trade policy reform in developing countries”, Journal of Economic Perspectives, Vol. 6 No. 1, pp. 87-105.
86. Roland, G. (1991), “Political economy of sequencing tactics in the transition period”, in Csaba, L. (Ed.), Systemic Change and Stabilization in Eastern Europe, Dartmouth, Aldershot, pp. 47-64.
87. Sachs, J.D. (1987), “Trade and exchange rate policies in growth-oriented adjustment programs”, in Corbo, V., Goldstein, M. and Khan, M.S. (Eds), Growth-Oriented Adjustment Program, International Monetary Fund, World Bank, Washington, DC, pp. 291-325.
88. Sachs, J.D. and Warner, A. (1995), “Economic reform and the process of global integration”, Brookings Papers on Economic Activity, Brookings Institution Press, Washington, DC, pp. 1-118.
89. Sharer, R. et al. (1998), Trade Liberalization in IMF-Supported Programs, Chapters IV and V, World Economic and Financial Surveys, International Monetary Fund, Washington, DC, February.
90. Shleifer, A. and Treismann, D. (2000), Without a Map: Political Tactics and Economic Reform in Russia, MIT Press, Cambridge, MA.
91. Thomas, V. and Nash, J. (1991), “Reform of trade policy: recent evidence from theory and practice”, The World Bank Research Observer, Vol. 6, pp. 219-40.
92. Ulan, M. (2000), “Review essay: is a Chilean-style tax on short-term capital inflows stabilizing?”, Open Economies Review, Vol. 11, pp. 149-77.
93. van Wijnbergen, S. (1991), “Should price reform proceed gradually or in a ‘big bang’?”, Policy, Research, and External Affairs Working Paper, No. 702, World Bank, Washington, DC.
94. Wei, S-J. (1997), “Gradualism versus big bang: speed and sustainability of reforms”, Canadian Journal of Economics, Vol. 30, pp. 1234-47.
95. Williamson, J. and Mahar, M. (1998), “A survey of financial liberalization”, Essays in International Finance, No. 211, November, Department of Economics, Princeton University, Princeton, NJ.
96. Wolf, M. (1986), “Timing and sequencing of trade liberalization in developing countries”, Asian Development Review, Vol. 4, pp. 1-24.
97. World Bank (2001), Global Development Finance, Washington, DC.
98. World Bank (2002), Transition: The First Ten Years – Analysis and Lessons for Eastern Europe and the Former Soviet Union, Washington, DC.
99. Wyplosz, C. (2001), “How risky is financial liberalization in the developing countries?”, paper presented at the United Nations Conference on Trade and Development, G-24 Discussion Paper Series, No. 14, September.
100. Bikhchandani, S. and Sharma, S. (2001), “Herd behavior in financial markets”, IMF Staff Papers, Vol. 47 No. 3, pp. 279-310.
101. Corbo, V. and de Melo, J. (1987), “Lessons from the Southern Cone policy reforms”, The World Research Observer, Vol. 2, pp. 111-42.
102. Drazen, A. (2000), Political Economy in Macroeconomics, Princeton University Press, Princeton, NJ.
103. Edwards, S. (1984), “The order of liberalization of the external sector in developing countries”, Essays in International Finance, No. 156, December.
104. Nuti, D.M. (1991), “Stabilization and sequencing in the reform of socialist economies”, in Commander, S. (Ed.), Managing Inflation in Socialist Economies in Transition, World Bank, Washington, DC.