The Soft Budget Constraint: An Institutionalist Approach
AbstractIn this paper, we reconsider the concept of the BC in the light of an institutionalist approach. Kornai’s interpretation of the concept provides the basis of such an approach. He defines the BC as a conditional empirical fact regarding the specific behavioural regularity of agents that is determined by particular institutional setups. Different degrees of budget constraint (ranging from a SBC to a HBC) are thus considered as empirical facts exogenously given in different institutional contexts. In this perspective, the BC is related to the survival behaviour of boundedly rational (satisficing) agents. It implies neither market equilibrium nor optimality.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17649.
Date of creation: 09 Nov 2002
Date of revision:
Soft budget constraint; hard budget constraint; institutions; Say’s Principle; Walras’ Law;
Find related papers by JEL classification:
- P5 - Economic Systems - - Comparative Economic Systems
- P2 - Economic Systems - - Socialist Systems and Transition Economies
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
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