Revenue Decentralization and the Soft Budget Constraint Problem in Intergovernmental Fiscal Relations: The Case of Turkey

2020 ◽  
pp. 121-147
Author(s):  
Tekin Akdemir ◽  
Birol Karakurt
Keyword(s):  
Budget Constraint ◽  
Soft Budget Constraint ◽  
Intergovernmental Fiscal Relations ◽  
Constraint Problem

scholarly journals Is centralization a solution to the soft budget constraint problem?

2016 ◽  
Vol 45 ◽  
pp. 57-75 ◽  
Author(s):  
Avi Ben-Bassat ◽  
Momi Dahan ◽  
Esteban F. Klor
Keyword(s):  
Budget Constraint ◽  
Soft Budget Constraint ◽  
Constraint Problem

scholarly journals Market Socialism: A Case for Rejuvenation

1992 ◽  
Vol 6 (3) ◽  
pp. 101-116 ◽  
Author(s):  
Pranab Bardhan ◽  
John E Roemer
Keyword(s):  
Agency Problem ◽  
Budget Constraint ◽  
Private Ownership ◽  
Soft Budget Constraint ◽  
Market Socialism ◽  
Successful Operation ◽  
Viable Solution ◽  
Constraint Problem ◽  
Political Right ◽  
Essential Problem

In this paper, we will outline a feasible economic mechanism of “competitive socialism.” Our claim is that competitive markets are necessary to achieve an efficient and vigorous economy, but that full-scale private ownership is not necessary for the successful operation of competition and markets. Contrary to popular impression, this claim has not yet been disproved by either history or economic theory. It is the failure of both the political right and the left to disentangle the concepts of private ownership and the competitive market that has led to the premature obituaries for socialism. In the second section, we look at the question of the “soft budget constraint” as an agency problem under market socialism. We then propose two variants of a bank-centric system of insider monitoring as a viable solution to the agency problem. The next section discusses the essential problem of political accountability and the difficulty of credible pre-commitment in avoiding the soft budget constraint problem, and suggests ways of minimizing this problem in our proposed system. We then conclude by addressing some of the other standard objections to a proposal for market socialism.

scholarly journals A Soft Budget Constraint Explanation for the Venture Capital Cycle

2009 ◽  
Vol 10 (1) ◽  
pp. 71-90 ◽  
Author(s):  
Georg Gebhardt
Keyword(s):  
Venture Capital ◽  
Agency Problems ◽  
Probability Of Failure ◽  
Budget Constraint ◽  
New Venture ◽  
Venture Capitalist ◽  
Soft Budget Constraint ◽  
Private Benefits ◽  
Ex Ante ◽  
Constraint Problem

Abstract 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 informed outsider can. Therefore, the venture capitalist delegates the continuation decision to the outsider by ex ante restricting the amount of capital he has under management. The soft budget constraint problem becomes the more important the higher the entrepreneur’s private benefits are and the higher the probability of failure of a project is.

scholarly journals Central banks: Hesitant guardians of equilibrium

2018 ◽  
Vol 68 (s1) ◽  
pp. 125-139
Author(s):  
Jerzy Hausner ◽  
Andrzej Sławiński
Keyword(s):  
Monetary Policy ◽  
Best Practice ◽  
Financial System ◽  
Central Banks ◽  
Budget Constraint ◽  
Soft Budget Constraint ◽  
Intellectual Heritage ◽  
Inherent Tendency

In our paper we focus on situations when central banks have to conduct monetary policy in a world in which they cannot rely fully on what is regarded the best practice and they have to cope with financial system inherent tendency to be unstable. Both phenomena are rooted in János Kornai’s intellectual heritage highlighting that economy tends to divert from equilibrium and that soft budget constraint erodes economic actors’ behavior.

Innovation in centralized organizations: examining evidence from Soviet Russia

2014 ◽  
Vol 41 (1) ◽  
pp. 123-139 ◽  
Author(s):  
Dmitriy Chulkov
Keyword(s):  
Decision Making ◽  
Empirical Evidence ◽  
Budget Constraint ◽  
Soviet Economy ◽  
Decision Makers ◽  
Economic Systems ◽  
Soft Budget Constraint ◽  
Content Type ◽  
Economic Decision Making ◽  
Constraint Model

Purpose – This study aims to examine the economic factors that determine innovation pattern in centralized and decentralized economies and organizations. Design/methodology/approach – Empirical evidence on innovation in the centralized economy of the Soviet Union is reviewed. Existing theoretical literature in this area relies on the incentives of decision-makers in centralized organizations and on the concept of soft budget constraint in centralized command economies and hard budget constraint in market economies. This study advocates applying the hierarchy/polyarchy model of innovation screening to explain the pattern of innovation in centralized economic systems. Findings – Screening and development of innovation projects can be organized in a centralized or decentralized fashion. The differences in innovation between centralized and decentralized economic systems may be explained by elements of the principal-agent theory, the soft budget constraint model, and the theory of decision-making in hierarchies and polyarchies. Empirical evidence shows a sharp slowdown in both innovation and economic growth in the Soviet economy following the economic decision-making reform of 1965. The theoretical explanation most consistent with this evidence is the hierarchy decision-making model. Originality/value – Comparisons of innovation in centralized and decentralized economies traditionally relied on decision-makers' incentives and the concept of soft budget constraint. Upon analysis of empirical evidence from the centralized Soviet economy, this study advocates explaining innovation patterns based on decision-making theory of hierarchy.

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