The Hard Budget Constraint as the Pillar of the Economy

Michael Keren

A chapter in Comparative Economic Studies in Europe, 2021, pp 57-72 from Palgrave Macmillan

Abstract: Abstract The socialism-to-market transition is over but has left its marks on the transitioning economies. An important lesson of transition is the major effect of the hardness of the budget constraint on the process, the resulting economy, and the state. One should not overlook its ethical import: a hard BC means that you receive the fruits of your labor, pocket your earnings, and swallow your losses. Yet to be hard, the BC needs protection. Here the state’s vital role manifests in extreme differences in the success of transition in countries of very similar socialist economic structure: Eastern Europe vs. the FSU.

Keywords: Hard budget constraint; Soviet-type economies; Janos Kornai; P21; P26; P31 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:pal:stuchp:978-3-030-48295-4_4

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DOI: 10.1007/978-3-030-48295-4_4

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