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Understanding the Soft Budget Constraint

By ´³Ã¡²Ô´Ç²õ Kornai, Eric Maskin, and ³Òé²¹°ù»å Roland

Journal of Economic Literature, December 2003

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 ...

Rational Exuberance

By Stephen F. Le Roy

Journal of Economic Literature, September 2004

This article reviews the theory of speculative bubbles. Bubbles are a promising candidate as an explanation for the stock price run-up and collapse of the 1990s in the United States. The theory considers both irrational and rational bubbles, with emphasis...