Soft Budget Constraints and Predatory States

Mehrdad Vahabi

Review of Radical Political Economics, 2012, vol. 44, issue 4, 468-483

Abstract: The concept of the soft budget constraint (SBC) was initially formulated by economist Janos Kornai in the context of socialist economies. I argue that the SBC can be regarded as the political economy of a predatory state in both the so-called socialist and capitalist economies. The hard budget constraint (HBC) is not related to an ideal competitive market economy but to a household level budget constraint, particularly by salaried members of the population in both types of economies. JEL codes: D20, E20, P2, P5

Keywords: soft budget constraints; hard budget constraints; predatory state; socialist economies; financial crisis (search for similar items in EconPapers)
Date: 2012
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