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Growth Slowdown Under Central Planning: A Model of Poor Incentives

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  • Zuzana Brixiov??
  • Ale?? Bul??r

Abstract

Centrally planned economies tend to be less efficient than economies in which agents are free to choose their output targets, as well as the means to meet them. This paper presents a simple model of planner-manager interactions and shows how planned economies can end up in a low-effort, low-output equilibrium even though they may have started in a high-effort, high-output equilibrium.

Suggested Citation

  • Zuzana Brixiov?? & Ale?? Bul??r, 2002. "Growth Slowdown Under Central Planning: A Model of Poor Incentives," William Davidson Institute Working Papers Series 448, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2002-448
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Political Economy; Central planning; incentives; growth;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • P21 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Planning, Coordination, and Reform

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