Polity Atlas
EstablishedSource attached · not independently reviewedCLM-1160 · as of 2026-10-30 · about: Soft budget constraint · Author: Polity Atlas editorial team

“Kornai (1986) defines the softening of a budget constraint as the loosening of the link between a unit's spending and earnings because a paternalistic state or other institution will cover excess spending, and argues that it weakens price responsiveness and efficiency.”

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