Abstract

http://ssrn.com/abstract=862524
 
 

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Rebalancing Growth in China: A Three-Handed Approach


Olivier J. Blanchard


International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Francesco Giavazzi


Bocconi University - Department of Economics; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

November 25, 2005

MIT Department of Economics Working Paper No. 05-32

Abstract:     
Our paper is an attempt to define the contours of the right macroeconomic strategy for China. In a nutshell, we believe that the package includes a decrease in saving, with a focus on private saving, an increase in the supply of services, in particular health services, and an appreciation of the RMB. This is why we refer to this strategy as a three-handed approach: action on the fiscal and budgetary front, accompanied by currency revaluation.

We start by asking how the Chinese economy got to where it is - what the strategy has been since the beginning of the reforms, and what the main characteristics of the economy are today. We then ask what is the desirable path for the future, and which are the main policy tradeoffs implied by such a path. Finally, we put the various pieces together to describe what we believe is a consistent policy package.

Number of Pages in PDF File: 38

Keywords: China, growth, appreciation, services

JEL Classification: E2, O53

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Date posted: November 30, 2005  

Suggested Citation

Blanchard, Olivier J. and Giavazzi, Francesco, Rebalancing Growth in China: A Three-Handed Approach (November 25, 2005). MIT Department of Economics Working Paper No. 05-32. Available at SSRN: http://ssrn.com/abstract=862524 or http://dx.doi.org/10.2139/ssrn.862524

Contact Information

Olivier J. Blanchard (Contact Author)
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
202 623 7825 (Phone)
202 623 7271 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Francesco Giavazzi
Bocconi University - Department of Economics ( email )
Via Gobbi 5
Milan, 20136
Italy
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
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