The fiscal constraint to restructuring firms in transition economies
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
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 28 (2000)
Issue (Month): 1 (March)
|Contact details of provider:|| Web page: http://www.springer.com|
Postal:Suite 650, International Tower, 229 Peachtree Street, N.E., Atlanta, GA 30303
Phone: (404) 965-1555
Fax: (404) 965-1556
Web page: http://www.iaes.org/
More information through EDIRC
|Order Information:||Web: http://www.springer.com/economics/journal/11293/PS2|
When requesting a correction, please mention this item's handle: RePEc:kap:atlecj:v:28:y:2000:i:1:p:37-47. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.