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Which Enterprises (Believe They) Have Soft budgets after Mass Privatization? Evidence from Mongolia


  • James Anderson
  • Georges Korsum
  • And Murrell


To ascertain the prevalence of soft budgets and to find causes of softness, we surveyed 251 privatized Mongolian enterprises, asking whether state aid was expected when financial difficulties arose. One quarter of the enterprises expected such soft-budget aid, a large proportion of which have central government ownership. We examine causes of soft budgets in addition to state ownership, but the state variable dominates. Results are robust when using either instrumental variables or bivariate probit to unmask unmeasured selection effects. Local government ownership has a much weaker effect than does central ownership.

Suggested Citation

  • James Anderson & Georges Korsum & And Murrell, 1997. "Which Enterprises (Believe They) Have Soft budgets after Mass Privatization? Evidence from Mongolia," William Davidson Institute Working Papers Series 83, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:1997-83

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    References listed on IDEAS

    1. Micklewright, John & Nagy, Gyula, 1996. "Labour market policy and the unemployed in Hungary," European Economic Review, Elsevier, vol. 40(3-5), pages 819-828, April.
    2. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, vol. 58(4), pages 757-782, July.
    3. Lubyova, Martina & van Ours, Jan, 1997. "Unemployment dynamics and the restructuring of the Slovak unemployment benefit system," European Economic Review, Elsevier, vol. 41(3-5), pages 925-934, April.
    4. van Ours, Jan C, 1994. "Matching Unemployed and Vacancies at the Public Employment Office," Empirical Economics, Springer, vol. 19(1), pages 37-54.
    5. Earle, John S. & Pauna, Catalin, 1996. "Incidence and duration of unemployment in Romania," European Economic Review, Elsevier, vol. 40(3-5), pages 829-837, April.
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    Cited by:

    1. Hongbin Li & Weiying Zhang & Li-An Zhou, 2005. "Ownership, Efficiency, and Firm Survival in Economic Transition: Evidence from a Chinese Science Park," Discussion Papers 00008, Chinese University of Hong Kong, Department of Economics.
    2. Kornai, János, 2000. "A költségvetési korlát megkeményítése a posztszocialista országokban
      [Hardening of the budget constraint in the post-socialist countries]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 1-22.
    3. 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.

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    JEL classification:

    • P11 - Economic Systems - - Capitalist Systems - - - Planning, Coordination, and Reform
    • P21 - Economic Systems - - Socialist Systems and Transition Economies - - - Planning, Coordination, and Reform
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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