Understanding the Soft Budget Constraint

János Kornai, Eric Maskin and Gérard Roland

No 19, Economics Working Papers from Institute for Advanced Study, School of Social Science

Abstract: We propose a clarification of the notion of a soft budget constraint, a concept widely used in the analysis of socialist, transitional, and market economies. Our interpretation is broad enough to embrace most existing approaches to soft budget constraint phenomena and provides a classification of their causes and consequences. In light of this interpretation, we then review the theoretical literature on the subject and compare it with those on other dynamic commitment problems in economics.

Pages: 78 pages
Date: 2002-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

Published in Journal of Economic Literature, 2003, Vol. 41, issue 4, 1095-1136

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Related works:
Journal Article: Understanding the Soft Budget Constraint (2004)
Journal Article: Understanding the Soft Budget Constraint (2003)
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