Soft budget constraint and the parastatal sector
AbstractThis paper explores the relevance of soft budget constraints (SBC) to development studies by examining the parastatal sector. The political ingredient of the SBC is discussed by focusing on two examples: 1) religious and military foundations in Iran; and 2) Fannie Mae and Freddie Mac. It presents two main findings. First, the SBC of the parastatal sector can be understood as the political economy of a predator state or state’s rent-seeking activity. Second, the state sector is more prone to the SBC compared with a decentralized competitive market, but it might be subject to a harder budget constraint in comparison with the parastatal sector.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37926.
Date of creation: Oct 2011
Date of revision:
soft and hard budget constraints; parastatal sector; predatory state; religious and military Foundations;
Find related papers by JEL classification:
- D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
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- E11 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Marxian; Sraffian; Institutional; Evolutionary
- D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-17 (All new papers)
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