Economics at your fingertips  

The fiscal constraint to restructuring firms in transition economies

Philipp Schröder

Atlantic Economic Journal, 2000, vol. 28, issue 1, 37-47

Abstract: Restructuring transition enterprises has been slow. Many firms remain unprivatized and the new owners (of privatized firms) take inadequate measures. Various arguments often have been brought forth to explain this sluggish adjustment. This paper identifies a structural barrier at the governmental level: The government designs the privatization program which leads to restructuring. However, transition governments are in a fiscal squeeze because restructuring relocates costs from firms to the public budget. Nevertheless, the deficit should be kept within narrow limits. This problem is analyzed within a stylized dynamic model. This paper finds that the fiscal constraint can delay or halt privatization. Careful sequencing of policy and a low ratio of wage-to-profit taxes can remedy the problem. Copyright International Atlantic Economic Society 2000

Date: 2000
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link) (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/11293/PS2

Access Statistics for this article

Atlantic Economic Journal is currently edited by Kathleen S. Virgo

More articles in Atlantic Economic Journal from Springer, International Atlantic Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-08-29
Handle: RePEc:kap:atlecj:v:28:y:2000:i:1:p:37-47