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Journal of Economic Literature: Vol. 41 No. 4 (December 2003)

JEL Volume. 41, Issue 4 | Next Articleright

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Understanding the Soft Budget Constraint

Article Citation

Kornai, János, Eric Maskin, and Gérard Roland. 2003. "Understanding the Soft Budget Constraint." The Journal of Economic Literature, 41(4): 1095-1136.

DOI: 10.1257/002205103771799999

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 phenomena and provides a classification of their causes and consequences. In light of this interpretation, we then review the theoretical literature on the subject and compare it with those on other dynamic commitment problems in economics.

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Authors

Kornai, János
Maskin, Eric
Roland, Gérard


Journal of Economic Literature



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