منابع مشابه
Understanding the Soft Budget Constraint
WDI. We express our gratitude to the editor, John McMillan and two anonymous referees for valuable comments and suggestions. ABSTRACT. We propose a clarification of the notion of a soft budget constraint, a concept widely used in the analysis of socialist, transitional, and market economies. Our interpretation is broad enough to embrace most existing approaches to soft budget constraint phenome...
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This paper applies the theory of the soft budget constraint to explain some stylized facts regarding the outcomes and practice of international aid, including ineffectiveness, white elephants, and volatility. The soft budget constraint can also make aid counterproductive. Nonetheless, actual aid institutions may be constrained optimal responses to soft budgets and commonly suggested reforms suc...
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The government's incentives to bail out inefficient projects are determined by the tradeoff between political benefits and economic costs, the latter depending on the decentralization of government. Two effects of federalism are derived: First, fiscal competition among local governments under factor mobility increases the opportunity costs of bailout and thus serves as a commitment device (the ...
متن کاملA Soft Budget Constraint Explanation for the Venture Capital Cycle
We explore why venture capital funds limit the amount of capital they raise and do not reinvest the proceeds. This structure is puzzling because it leads to a succession of several funds financing each new venture which multiplies the well known agency problems. We argue that an inside investor cannot provide a hard budget constraint while a less well informed outsider can. Therefore, the ventu...
متن کاملSoft Budget Constraint Theories: From Centralization to the Market
Introduction This paper has two purposes. One is to examine the effect of soft budget constraints (SBC) on economies in transition from centralization to capitalism. The other is to survey our understanding of SBC more generally. Of course, this latter aim is also pertinent to the former. Current work on SBC follows in the tradition of the famous debate in the late 1930s and early 1940s on mark...
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ژورنال
عنوان ژورنال: Acta Oeconomica
سال: 2014
ISSN: 0001-6373,1588-2659
DOI: 10.1556/aoecon.64.2014.s1.2