IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

La contrainte budgétaire lâche et la théorie économique
[Soft Budget Constraint and Economic Theory]

  • Vahabi, Mehrdad

The budget constraint as a bookkeeping identity is a fundamental concept of standard microeconomics. Clower reinterpreted this concept as a rational planning postulate. The notion of soft budget constraint (SBC), formulated for the first time by Janos Kornai (1979) in the context of a socialist economy is a heresy according to standard microeconomics and Clower, since budget constraint is by definition hard. Nevertheless, this concept is now applied in the analysis of post-socialist transition, emerging and developing countries, as well as developed capitalist economies. During the last fifteen years, the universal feature of the SBC motivated a formalised representation of this phenomenon in the framework of asymmetrical information literature. Hence, the SBC is reduced to a time inconsistency problem, namely the lack of credible dynamic commitment by the principal. The SBC is thus incorporated in new microeconomics and loses its institutional specificity. On a theoretical level, this removal of institutional specificity impoverishes the concept of SBC and brings us to reconsider the premises on which the original theory has been founded and to question the theoretical contradictions and tensions in Kornai’s works, from its beginning, which impeded the emergence of a more coherent institutional theory of the SBC.

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.

File URL: https://mpra.ub.uni-muenchen.de/17651/1/MPRA_paper_17651.pdf
File Function: original version
Download Restriction: no

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17651.

as
in new window

Length:
Date of creation: Sep 2003
Date of revision:
Handle: RePEc:pra:mprapa:17651
Contact details of provider: Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: https://mpra.ub.uni-muenchen.de

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Mark Blaug, 1997. "Say's Law of Markets: What Did It Mean and Why Should We Care?," Eastern Economic Journal, Eastern Economic Association, vol. 23(2), pages 231-235, Spring.
  2. Ann P. Bartel & Ann E. Harrison, 1999. "Ownership versus Environment: Why are Public Sector Firms Inefficient?," NBER Working Papers 7043, National Bureau of Economic Research, Inc.
  3. Majumdar, Sumit K., 1998. "Slack in the state-owned enterprise: An evaluation of the impact of soft-budget constraints," International Journal of Industrial Organization, Elsevier, vol. 16(3), pages 377-394, May.
  4. Oliver Hart & John Moore, 1985. "Incomplete Contracts and Renegotiation," Working papers 367, Massachusetts Institute of Technology (MIT), Department of Economics.
  5. Maskin, Eric S., 1996. "Theories of the soft budget-constraint," Japan and the World Economy, Elsevier, vol. 8(2), pages 125-133, June.
  6. Bajt, A, 1991. " Irrelevance of the Soft Budget Constraint for the Shortage Phenomenon," Economic Change and Restructuring, Springer, vol. 24(1), pages 1-12.
  7. Dewatripont, M & Maskin, E, 1995. "Credit and Efficiency in Centralized and Decentralized Economies," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 541-55, October.
  8. Bertero, Elisabetta & Rondi, Laura, 2000. "Financial pressure and the behaviour of public enterprises under soft and hard budget constraints: evidence from Italian panel data," Journal of Public Economics, Elsevier, vol. 75(1), pages 73-98, January.
  9. Simon,Herbert A., 2009. "An Empirically-Based Microeconomics," Cambridge Books, Cambridge University Press, number 9780521118361.
  10. Maskin, Eric & Tirole, Jean, 1999. "Unforeseen Contingencies and Incomplete Contracts," Review of Economic Studies, Wiley Blackwell, vol. 66(1), pages 83-114, January.
  11. Rochet, Jean-Charles & Tirole, Jean, 1996. "Interbank Lending and Systemic Risk," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 28(4), pages 733-62, November.
  12. Dewatripont, Mathias & Tirole, Jean, 1996. "Biased principals as a discipline device," Japan and the World Economy, Elsevier, vol. 8(2), pages 195-206, June.
  13. Szabo, Judit, 1988. " Preliminary and Incremental Softness of the Budget Constraint: A Comment on the Gomulka-Kornai Debate," Economic Change and Restructuring, Springer, vol. 22(3), pages 109-16.
  14. Chong-en Bai & Yijiang Wang, 1995. "A Theory of the Soft-Budget Constraint," Boston College Working Papers in Economics 298., Boston College Department of Economics.
  15. Levaggi, Rosella & Zanola, Roberto, 2000. "The Flypaper Effect: Evidence from the Italian National Health System," POLIS Working Papers 10, Institute of Public Policy and Public Choice - POLIS.
  16. Janos Kornai & Eric Maskin & Gerard Roland, 2002. "Understanding the Soft Budget Constraint," Economics Working Papers 0019, Institute for Advanced Study, School of Social Science.
  17. William J. Baumol, 1997. "J. B. Say on Unemployment and Public Works," Eastern Economic Journal, Eastern Economic Association, vol. 23(2), pages 219-230, Spring.
  18. Raiser, Martin, 1994. "The no-exit economy: Soft budget constraints and the fate of economic reforms in developing countries," World Development, Elsevier, vol. 22(12), pages 1851-1867, December.
  19. Moesen, Wim & van Cauwenberge, Philippe, 2000. " The Status of the Budget Constraint, Federalism and the Relative Size of Government: A Bureaucracy Approach," Public Choice, Springer, vol. 104(3-4), pages 207-24, September.
  20. Braga de Macedo, Jorge, 1990. "External Liberalization with Ambiguous Public Response: The Experience of Portugal," CEPR Discussion Papers 378, C.E.P.R. Discussion Papers.
  21. Berglof, Erik & Roland, Gerard, 1997. "Soft budget constraints and credit crunches in financial transition," European Economic Review, Elsevier, vol. 41(3-5), pages 807-817, April.
  22. David Begg & Richard Portes, 1993. "Enterprise debt and economic transformation (Financial restructuring of the state sector in Central and Eastern Europe)," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(1), pages 116-117, 01.
  23. Aaron Tornell, 1999. "Privatizing The Privatized," Harvard Institute of Economic Research Working Papers 1869, Harvard - Institute of Economic Research.
  24. Kornai, J, 1979. "Resource-Constrained versus Demand-Constrained Systems," Econometrica, Econometric Society, vol. 47(4), pages 801-19, July.
  25. Schaffer, Mark E., 1998. "Do Firms in Transition Economies Have Soft Budget Constraints? A Reconsideration of Concepts and Evidence," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 80-103, March.
  26. Magee, Karen L & Quandt, Richard E, 1994. " The Kornai Effect with Partial Bailouts and Taxes," Economic Change and Restructuring, Springer, vol. 27(1), pages 27-38.
  27. Kornai, Janos & Weibull, Jorgen W., 1983. "Paternalism, buyers' and sellers' market," Mathematical Social Sciences, Elsevier, vol. 6(2), pages 153-169, November.
  28. Williamson, Oliver E., 1999. "The Mechanisms of Governance," OUP Catalogue, Oxford University Press, number 9780195132601.
  29. Kornai, Janos, 1986. "The Soft Budget Constraint," Kyklos, Wiley Blackwell, vol. 39(1), pages 3-30.
  30. Bai, Chong-en & Wang, Yijiang, 1998. "Bureaucratic Control and the Soft Budget Constraint," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 41-61, March.
  31. Mehrdad Vahabi, 2001. "The Soft Budget Constraint: A Theoretical Clarification," Post-Print hal-00629160, HAL.
  32. Prell, Mark A., 1996. "The Two Kornai Effects," Journal of Comparative Economics, Elsevier, vol. 22(3), pages 267-276, June.
  33. Li, David D. & Liang, Minsong, 1998. "Causes of the Soft Budget Constraint: Evidence on Three Explanations," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 104-116, March.
  34. Vahabi, Mehrdad, 2008. "From Walrasian general equilibrium to incomplete contracts : making sense of institutions," MPRA Paper 37887, University Library of Munich, Germany, revised 2002.
  35. Pun, Wing-chung, 1995. "The Kornai Effect and Soft Budget Constraints," Journal of Comparative Economics, Elsevier, vol. 21(3), pages 326-335, December.
  36. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-19, March.
  37. Bos, Dieter & Lulfesmann, Christoph, 1996. " The Hold-Up Problem in Government Contracting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(1), pages 53-74, March.
  38. Michael Keren, 1993. "On the (Im)possibility of Market Socialism," Eastern Economic Journal, Eastern Economic Association, vol. 19(3), pages 333-344, Summer.
  39. Qian, Yingyi & Roland, Gérard, 1994. "Regional Decentralization and the Soft Budget Constraint: The Case of China," CEPR Discussion Papers 1013, C.E.P.R. Discussion Papers.
  40. Berglof, Erik & Roland, Gerard, 1998. "Soft Budget Constraints and Banking in Transition Economies," Journal of Comparative Economics, Elsevier, vol. 26(1), pages 18-40, March.
  41. Kornai, Janos, 2001. "Hardening the budget constraint: The experience of the post-socialist countries," European Economic Review, Elsevier, vol. 45(9), pages 1573-1599, October.
  42. Nett, Lorenz, 1992. "Negative effects of competition in a medical-service market," Economics Letters, Elsevier, vol. 40(4), pages 481-485, December.
  43. Huang, Haizhou & Xu, Chenggang, 1999. "Financial institutions and the financial crisis in East Asia," European Economic Review, Elsevier, vol. 43(4-6), pages 903-914, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:17651. 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: (Ekkehart Schlicht)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.