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Article

The Soft Budget Constraint

János Kornai · Kyklos 39(1), 3–30 · 1986

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Type: Article
Author: János Kornai
Identifier: DOI 10.1111/j.1467-6435.1986.tb01252.x
Accessed: 2026-09-01

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EstablishedKornai (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.