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| Tekijä: | Qian, Y. |
| Otsikko: | A theory of shortage in socialist economies based on the "soft budget constraint" |
| Lehti: | American Economic Review
1994 : MAR, VOL. 84:1, p. 145-156 |
| Asiasana: | BUDGET SOCIALIST ECONOMICS THEORIES |
| Kieli: | eng |
| Tiivistelmä: | This paper attributes shortages of goods in socialist economies to the soft financial constraints that firms in such economies face. A "soft budget constraint" problem arises when the state bank is unable to make a credible commitment not to refinance bad projects once some investment costs are sunk. In such a situation, if a consumer good is also demanded by firms as an input and the seller cannot separate firms from households, the high market-clearing price would lead to welfare losses because too may bad projects would start and crowd out household consumption. |
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