Understanding the Soft Budget Constraint

János Kornai, Eric Maskin and G. Roland

Voprosy Ekonomiki, 2004, issue 11

Abstract: The article deals with the phenomenon of the soft budget constraint (SBC). Though originally it was formulated to illuminate economic behavior in socialist economies, this concept is increasingly acknowledged to be pertinent well beyond their realm. The authors have two main objectives: conceptual clarification and survey of formal theoretical literature on SBC. In the first part of the article the accent is made on analyzing the essence of the SBC syndrome, means of its softening and corresponding expectations of organizations. Formal models of SBC in socialist and transition economies are also analyzed.

Date: 2004
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Journal Article: Understanding the Soft Budget Constraint (2003)
Working Paper: Understanding the Soft Budget Constraint (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:nos:voprec:y:2004:id:1965

DOI: 10.32609/0042-8736-2004-11-4-33

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